Page last updated at 17:09 GMT, Monday, 15 December 2008

Student loan options considered

Graduation ceremony
The SNP has been accused of falling short of its manifesto pledge

Plans to start replacing student loans with grants are among three options being considered as part of a shake-up of student support in Scotland.

The other proposals include topping-up the loans with grants, or reducing debt only for students on low incomes.

They are part of a consultation launched by Education Secretary Fiona Hyslop who has not stated a preference.

Opposition parties have accused the SNP of falling short of its manifesto pledge to scrap the loans altogether.

Labour higher education spokeswoman Claire Baker said: "The SNP promised to replace loans with grants and to write off student debt at the last election but these proposals fall incredibly far short of that.

"Once again students are seeing election promises disappear before their eyes, with the SNP's credibility on student issues now in tatters."

Deputy Tory leader Murdo Fraser also expressed concerns.

He said: "In the run-up to last year's election the message from the SNP could not have been more clear - vote for us and we will wipe out your debt.

"At campuses across Scotland students were fed this pack of lies. Many believed it. They have all been betrayed by the SNP Government which has abused their trust."

Three options

Ms Hyslop said the Scottish Government had already delivered on a commitment to scrap the graduate endowment fee, and had also made a start on replacing loans by bringing in 38m worth of grants for part-time students in higher education.

She said: "Among the proposals are further plans to move from loans to grants - loans which we believe are wrong for students and wrong for Scotland.

"It would be better for students if grants were paid directly to them and it would be better for graduates if they were not forced to leave higher education thousands of pounds in debt."

The first option set out in the consultation paper would see a transition towards a grants-based system, seeing an end to student loans. It is argued that this would save the UK Treasury 30m which could be reinvested in bursaries. The Scottish Government has already set aside 30m to pay for changes in 2010.

The second option - adding new grants to the existing loan entitlement scheme - would increase student's minimum income level from 5,100 to about 5,500 for those on the lowest incomes, and from 4,510 to 5,000 for others. But while helping those on lower incomes, this would also increase the parental contributions expected from the better-off.

The third option, a combination of the other two, may see an additional grant being given to those on the young student bursary with a family income of less than 21,210 a year.

This could see an existing 590 loan being replaced with a grant, and the overall amount of the grant being increased to 1,200 for those on the lowest incomes.

The Liberal Democrat education spokeswoman Margaret Smith welcomed the inclusion of minimum income guarantees in the consultation, but questioned why this was being raised to 5,500 rather than 7,000.

She said: "Although we're pleased that the SNP is consulting on minimum income guarantees, as called for by the Liberal Democrats, we are concerned their current plans don't go far enough."

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