Page last updated at 15:38 GMT, Wednesday, 29 October 2008

Grants cut over funding blunder

The new threshold comes into force from 2009-10

Grants for students in England starting university next year will be cut because the government underestimated how many would be eligible for support.

The Department for Innovation, Universities and Skills has admitted it has a funding shortfall of 200m, after improving financial support this year.

The error means the upper limit to receive grants will now be reduced from a family income of 60,000 to 50,020.

Up to 40,000 prospective students will lose grants of up to 524 a year.

Last year the department announced improvements to the student financial support package, with two thirds of students getting either the full grant of 2,835 or partial grants down to a value of 50.

Ministers got their sums completely wrong
Stephen Williams, Liberal Democrats

But Universities Secretary John Denham admitted the department had expected only a third of students to qualify for the full grant - in fact 40% had qualified.

Speaking to MPs on the Innovation, Universities, Science and Skills Committee on Wednesday, Mr Denham said it had been difficult for his department to predict "with absolute precision" the number of people within the system, because it had to use data available when the grants were increased last year.

"You are only going to be 100% if you have been running the system for some time," he said.

Poorer students unaffected

For a 60k income: Loan of 3,564
For a 50k income: Grant of 50 and loan of 4,925
For a 25k income: Grant of 2,906 and loan of 3,497

Thousands of middle-income students planning to go to university in 2009 will now not receive partial annual grants of between 524 (for a family income of 50,020) and 50 (for an income of 60,000) - money they would have received had they started university this autumn.

The department estimates 10% of students - 35,000 to 40,000 - will be affected.

Mr Denham said the lowering of the threshold would help recover 100m of the overspend, while the remaining 100m will be recovered from departmental savings.

Growth in student numbers will also be cut next year to "no more than 10,000" - a revision of a target of 15,000 new student places.

For a 60k income: Grant of 52 and loan of 4,693
For a 50k income: Grant of 538 and loan of 4,207
For a 25k income: Grant of 2,906 and loan of 3,453

He said the new student support arrangements would only apply to new students starting in higher education in the next academic year.

Mr Denham stressed that students from poorer backgrounds would still get their full grants, which is available to students whose family income is 25,000 or below.

Existing students would receive the same support as they were entitled to when they started university, he added.

'Heavy blow'

Shadow Universities Secretary David Willetts said: "From next year, first years, second years and third years at university will all be on different maintenance grant regimes.

"This is a heavy blow for students, 65,000 of whom have already applied."

For a 60k income: Loan of 3,559
For a 50k income: Loan of 3,645
For a 25k income: Grant of 1,773 and loan of 3,453

Mr Willetts said the government had not thought the policy through and that students and their families would suffer as a result.

He has written to Mr Denham asking for a further explanation of the cuts.

Liberal Democrat University spokesman Stephen Williams said: "Ministers got their sums completely wrong.

"This kind of incompetence is not going to persuade young people that the government is committed to supporting them with their studies.

"As we enter a recession, ministers are going to have to face-up to the fact that more students are going to be expecting to receive maintenance support in the years to come."

Wes Streeting, president of the National Union of Students, said the measures introduced by government to compensate for its miscalculation hit students from middle-income families "at a time when they are struggling to cope with the impact of the credit crunch".

"The government needs to stop tinkering with grants and fees every year, and recognise that the entire higher education funding system is unsustainable. We need a proper review of the system so that parents and students know where they stand," he said.

The Office for Fair Access said the government package remained generous and would not adversely affect applications from students from low-income families and other under-represented groups.

Print Sponsor

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