THIS TRANSCRIPT IS ISSUED ON THE UNDERSTANDING THAT IT IS TAKEN FROM A LIVE PROGRAMME AS IT WAS BROADCAST. THE NATURE OF LIVE BROADCASTING MEANS THAT NEITHER THE BBC NOR THE PARTICIPANTS IN THE PROGRAMME CAN GUARANTEE THE ACCURACY OF THE INFORMATION PRINTED HERE. Tape Transcript by JANE TEMPLE MONEY BOX LIVE Presenter: Paul Lewis Guests: Lindsey Fidler Baker Geraldine Bailey Kevin Broadbent TRANSMISSION 2nd FEB 2004 1500 - 1530 RADIO 4 _______________________________________________________ ANNOUNCER: Now it’s two minutes past three and time for MONEY BOX LIVE with Paul Lewis: LEWIS: Hello what does it cost to go to university? – and how will that change under the plans announced in the higher education bill which scraped through Parliament by 5 votes? - was it really less than a week ago? Today Money Box Live looks at the whole subject of student finance: what happens now? – the changes that start this September and then of course those major reforms beginning in September 2006. So if you’re a student, you want to be one, or you’re a parent with children who hope to go to university Money Box Live today is for you. What are the rules for today’s students? What differences are there for those that start in September this year? And what faces school pupils taking GCSEs this summer? – who’ll be the first to pay up to £3000 a year for their university tuition. What can young people and their parents do to make going to university more affordable? Already the debts of this year’s graduates averaged £12,000. In future estimates start at £30,000 – more for some courses. So what’s the best way to save up to help your children or grandchildren avoid 25 years of debt? Whatever your question on student finance you can call Money Box Live now – 08700 100 444 And with me today to answer your questions are Geraldine Bailey – she’s a money and welfare advisor from Middlesex University and a member of the National Association of Student Money Advisors – Kevin Broadbent is an independent financial advisor from Chase de Vere Financial Services and Lindsey Fidler Baker is research and information manager at the National Union of Students. And the first question is from Susanne in Cambridge. Susanne your question? SUSANNE: Oh hello. It’s just a simple question I hope – I’ve read that for those students beginning their degree before the implementation of top up fees in 2006 their fees will remain at the current £1125 throughout their course. My daughter will start at university September 2005. Am I correct in assuming therefore that her tuition fees will stay at the current level throughout and not rise to a potential £3000 per year in her second year? LEWIS; Well a simple question Susanne but I suspect we’re going to have some fairly complicated answers during the course of the afternoon. Lindsey Fidler Baker let me put that to you first? BAKER: Hi Susanne. Yes the tuition fees will stay at a capped rate for entrance before September 2006. The tuition fee level however is likely to go up each year by roughly £25 has been the level at the moment so you’re sort of looking at a £1175 tuition fee for September 05 and a £25 rise every year that your daughter’s studying. SUSANNE: Right. LEWIS: But the important point Geraldine Bailey is that people who start their degrees before 2006 won’t be subject to the new rules in the higher education bill? BAILEY: Yes, that’s correct. The only thing that will change – currently students are expected to pay their fees up front when they go to university so Susanna when your son gets to 2006 he will have the option not to pay that fee up front. SUSANNA: Right LEWIS; So, just let me be clear about that – the actual system of paying the fees changes in 2006? – so instead of paying them – at the moment you have to borrow the money from the bank or somebody and pay the fee – in future BAILEY: Or you get it from your local education authority because your income is below a certain level but in 2006 because of the new bill that’s being introduced it’s quite likely that students won’t have to pay their fees up front so students starting now won’t necessarily have to pay up front. I mean this is something that the DFES have actually told me this morning so we can’t say that there are any guarantees that this will go ahead. LEWIS: Does that answer your question Susanne? SUSANNA: Yes it has – a lot of information that I didn’t know actually so thank you very much for that. LEWIS; Okay and I should point out that a transcript of this programme is available on our website because there will be a lot of detail I’m sure people want to follow up our website – www.bbc.co.uk/moneybox. Just before we move to the next question let’s just have a sort of quick summary of the major changes. Lindsey and Geraldine you share this between you – Lindsey you start? BAKER: Okay I’ll start then LEWIS: These are the plans for 2006 – not for this year? BAKER: Well it’s probably worth pointing out that the first – the first changes are really coming in this year with a means tested grant of £1000 being introduced for new – new students. LEWIS: Right, now this is separate from the bill though – this is part of the September 2004 change? BAKER: It’s part of the white paper proposals and there’s staggered introductions. There’ll be further changes in September 2005 when the repayment threshold for the student loan will go up to £15,000. LEWIS It’s ten at the moment? BAKER: It’s £10,000 at the moment and then in September 2006 are the really big changes where tuition fees will rise to a maximum of – of £3000 and the student support available for that will also change. There’ll be a means tested grant of up to £1500 which the student can use either to pay their fees or as a maintenance grant. There’s also a means tested grant of £1200 which I understand from the government now you can also use to pay your fees or for maintenance so they’ll be rolling it into a £2700 flexible grant as it were. On top of that institutions will be expected to provide bursaries to meet up to £300 of a tuition fee. LEWIS: This will be basically a grant from the university to help meet the costs? BAKER: That’s right – to bridge the gap between the £2700 and the £3000 really. LEWIS: And the institute of physics has said it’s going to introduce grants to encourage people to do physics didn’t it? BAKER: Yes I understand that that’s the case – hope more of that will be coming LEWIS: (talking over ) all nice and simple? BAKER: Absolutely. There’s also an increased loan for living costs that will be introduced in 2006 and that’ll be for those that don’t get the full means tested support. LEWIS: Right, so now it’s about what? - £4000 a year the loan for your living costs? BAKER: For outside London it is at the moment – and that’ll be rising to – from what I understand just over £6000. But that’s – it’s worth pointing out that those who get the full means tested support will not be eligible for that increased loan. LEWIS: Right, I’m a bit lost already I have to confess. Geraldine - it’s not your fault I hasten to add- Geraldine you said you had – you talked to the DFES this morning. I know a number of you had meetings with them. Are they really clear about all the changes and when they’re going to come in? BAILEY: Well I think to some extent they’re clear because they’ve had to write the regulations but they’re not absolutely certain that they’re going to go through so it would be unwise to say that these things are definitely going to happen. But if I could just come back to changes that are going to start in 2004 LEWIS: Right, so these are students going to university this September – the ones who are doing their A levels this summer? BAILEY: That’s correct. Okay well one of the key changes is that step parents are now going to be included in the income assessment. Up until now parents haven’t – step parents haven’t had to contribute to the cost of children going to universities but this is actually going to change this academic year LEWIS: And when you say step parents – you mean husbands or wives of – the biological parent? BAILEY; That’s correct. LEWIS: Or live in partners? BAILEY: That’s right. LEWIS: Both – both? BAILEY: Yeah they’re all going to be covered except for gay couples but that is also subject to change in 2005 when the civil partnership bill goes through so it could even change for gay couples as well. I mean that’s quite a significant change. LEWIS: So I suppose if they embark on a civil partnership they’ll be embarking on responsibility for those things as well. Right, okay so quite a lot to take in there. Yes sorry just one more BAILEY: Can I just add – further to that there’s new regulations coming in regarding part time students this year – the £500 loan is being abolished and replaced by a means tested grant of £250 and also there will be a fee grant of up to £575. LEWIS: And that’s towards the fees of what they’ll be £1150 next year? BAILEY; Well we’re talking about part time students here? LEWIS: Oh sorry. BAILEY; So obviously universities will set their own fees but the – the amount that they can actually get towards their fees will be capped at £575. LEWIS: Right – let’s take another call. I might come back to ask you a bit later where on earth people can go to get help with all this complexity but let’s take another call now – Ruth’s calling us from Tyne and Wear – Ruth your question? RUTH; Yes hello – wonder if you can help me? My son is finishing school in 2005 and would like to have a gap year and actually go to university in 2006. Now if he acquires a place in 2005 will he avoid the top up fees of 2006 even though he actually starts in that year? LEWIS: Well, do we know the answer to that – Geraldine? BAILEY: Well it’s actually not very clear Ruth what the answer to that is. We have had indications that gap year students will have to pay £3000 but as I say it’s not certain so I shouldn’t bank on it. RUTH: Right we were just wondering if there’d be a huge amount of competition for – for places in 2005? BAILEY: Well there certainly will be if they are found to have to pay. LEWIS: That would be the concern Lindsey. I mean we don’t know but what’s happened in the past cos there’s been fairly regular changes. What – if you’ve done a gap year and gone a year later have you been subject to the new rules or the old rules in the past? BAKER: Well I think the big change that we should probably compare it to is when tuition fees were introduced in 98 and under those circumstances if – if a student had secured a place at university they were protected from paying the tuition fees under the new system but as Geraldine rightly says we don’t have that guarantee under this system at all so it’s really too – too early for us to say I think. LEWIS: So that has to be a formal gap year where you’ve got your place but you just put it off for a year? BAKER; If you had secured a place at an institution on the – on the understanding that you would be attending in the next academic year then yes but as I said we can’t say for sure whether that will apply under this new system. LEWIS: So I suppose we won’t know these things until the bill’s gone through and I suppose we should come back to this subject in - next autumn when we’ve got some more definite answers about 2006. Okay, I’m very conscious our financial expert Kevin hasn’t had much to say yet but we’ll just take one more question before we have a saving question which hopefully is quite simple – Janet, is calling us from Leeds – Janet your question? JANET: Hello everyone. My question is regards to families on low incomes. I was interested to know if the £15000 threshold for the reduction of tuition fees was before tax or after tax? And if you earn just over this amount will they be charged pro rata? LEWIS: Right now this is the £15000 limit on parental income and whether tuition fees will be charged to the student – do we know the answer to this Geraldine? BAILEY: Well we’re actually talking about two different things here I think – there might be a slight confusion. The £15,200 is actually the limit for the income to receive the maintenance grant whereas the fee contribution is currently being set at £21,475 so you see there are two different thresholds depending on which area of the finance you’re talking about. LEWIS: And we’re still talking about 2006 of course aren’t we? BAILEY: Yeah – no we’re talking about next year. LEWIS: Oh, we’re talking about next year right. Janet are you interested in the limits next year or the limits in 2006? JANET: It’ll actually be next year – it’s actually starting this year actually 2004 – September. LEWIS: So these are rules about 2000….-explain what those rules are then Geraldine? BAILEY: Well basically – as you know the new maintenance grant is being introduced and this is going to be means tested and it will be available for students whose parents have an income of less than £15,200. And LEWIS: The parents and step parents indeed? BAILEY: Indeed yes. And that – that level actually goes up to £21,185 where any differential between those two figures there’ll be £1 deducted from that grant for each £6.30 LEWIS: Right right- Lindsey – anything to add on that? BAKER: I guess just to address the point of whether it’s gross income – whether it’s gross or LEWIS: Net income? BAKER: Net income. There are – there are some – some disregards that will come off the – the family income when calculating that but I’m afraid Janet it’s not as simple as looking at gross or net income as you expect. There’s basically certain disregards that can be applied: for example if you have children you will have – you will have certain amount of your income….disregarded LEWIS: That’s if you other dependent children? BAKER: Other dependent children for example. I mean the best – the – the system is being simplified next year but the best thing to do would really to seek advice from a student advisor or from your local education authority to have a look at how much of your income will actually be – be accounted for. LEWIS: Now you mention advice and I’m going – going to raise this point now because I’m sure a lot of people like me are a bit confused about the changes this year, the changes in 2005, the possible changes in 2006 – if you’re a parent or indeed a young person waiting to go to university where do you go to get that advice? Where are these student advisors? BAKER; Well there are student advisors based in colleges and universities and in the students unions LEWIS: So once you’ve got a place go to the student advisor at the university you’re going to and they will talk to you even before you’re a student there? BAKER: Some – some universities will actually advise potential students who are thinking about going to the institution and that – I think that is certainly a good idea if your situation is complicated – I would – I would do that. You can also go to the likes of NUS – we have – we have an advice line and Citizen’s Advice Bureau will also advise in this area and local education authorities will also do – or should also do initial or provisional assessments. LEWIS: Right, so while you’re busy studying for you’re a levels you can rush round all of them and Geraldine the National Association of Student Money Advisors – how do we get in touch with your group? BAILEY: Well currently the National Association wouldn’t be offering direct advice to students because it actually consists of advisors who are currently based in universities. LEWIS: Oh so these are the advisors that Lindsey was talking about? BAILEY: But in addition to going to advisors you could also – I mean it will be readily available – the Department of Education and Skills do produce a fairly comprehensive booklet each academic year and this will be sent to each student who submits an application for funding so you get a fair amount of detail in that booklet that you can get the information you want. LEWIS: And there is information on the student loan company website and on the DFES website and I think on the National Union of Students website as well. So – so tons of work for those poor school students to do while they’re studying. Thanks very much for your call Janet. We’re not going to move on to Helen who’s calling us from Staffordshire. Helen, your question? HELEN: Hi afternoon. I’ve got two children – one’s 18 months, one’s four – I had a free education – I’d like them to. What we’re – what we really want to do was try and plan ahead and we’re thinking of maybe saving child benefit but we not really sure where to put it or whether that was a good idea? LEWIS: Right, so you’re getting child benefit – are you getting child tax credit as well may I ask? HELEN: We are yes LEWIS: Right, well you’ve got a fair bit to save up then if you want to. Kevin what would you say to Helen? BROADBENT: Hello Helen HELEN: Hi BROADBENT: Hi – two questions to start with : how much is the child benefit per month? HELEN: It’s about £25 BROADBENT: £25 HELEN: Sorry a week – a week BROADBENT: It’s about £100 a month and your youngest child – what – what was their date of birth? HELEN: 16th July last year. BROADBENT: So 2003 HELEN: 2002 BROADBENT: 2002 – so July 2002? HELEN: Yeah BROADBENT: The reason I ask is that the – there’s a child trust account that’s being introduced by the government in April 2005 which will allow savings of up to £1200 a year tax – free of tax – would also give a starting payment of £250. She seems upset already in the background LEWIS: Yes really worried about affording her university education BROADBENT: However, to qualify that you’ve got to be born before September 2002 so unfortunately neither of your children LEWIS: You’ve got to be born after September BROADBENT: After LEWIS: 1st September or afterwards so she’ll just miss that BROADBENT: Which is unfortunate. However the good news is that if you’ve got £100 a month that you don’t need and can put aside – you think about that – that’s £1200 a year and your two children have got 14/16 years before they reach the magic age of 18 so if you just add those figures up without any interest or growth from any investments then you’re starting to get a figure that is – is fairly sizeable and will make a dint in the shortfall between what it costs to go to university and the loans available from the government or the residual debt that’s left after the education is finished. So whether it’s a good idea or not I think it’s a resounding yes – the sooner you start saving the more you put away the more choice you will have or your children will have when they’re finished their education. HELEN: So just look around for maybe the best interest rate? BROADBENT: I think that when it comes to where to put it there are a number of questions – your timescales are fairly healthy at 14 and 16 years so you may want to accommodate a degree of risk in your investments because you’ve got the time for it to – to work. In terms of short term, low risk investments I would look to use your cash ISA limits or your – your investment ISA limits - avoiding paying tax is a very sensible idea because that drags the amount of return you get. If you’re looking over 10 years a lot of friendly societies have 10 year tax free savings policies where you can put £25 a month in so that builds up over a period of time and avoids the taxation. LEWIS: They are a bit strict though aren’t they – they have quite strict terms those friendly society policies – and big penalties if you do want to take the money out and – they’ve not really performed that well over the last few years? BROADBENT: They have a variety of fund options – some low risk with profits which is coming under a lot of scrutiny recently or others are now diversifying into more equity orientated investments so understanding the risk is exceptionally important before you start. LEWIS: And also diversifying – I mean some in cash, some maybe at a bit of risk, but you have to remember that if you do put it at risk it may go down or it may not perform very well – there is always that risk. That’s what risk BROADBENT: …yes and put it in different pots – some cash, some equity, but the key I think and as you get closer to the point where you’re going to need the money then I think what we would call in the industry a lifestyling decision needs to be made where if you are in investments that are riskier then you need to start moving gradually as you get closer to 18 into lower risk investments which can be fixed interest, maybe cash. LEWIS: But as you say the key thing is you’ve got £1200 a year for sort of 16 years – then you’re going to have £20,000 getting on for without any growth at all so certainly well worth doing and a very generous and sensible thing I think for Helen and her children BROADBENT: If you’re having just medium levels of growth over a number of years it starts to have a very positive effect. LEWIS: Yeah indeed. Well thanks very much for that advice Kevin. Let’s move on now to the next question - a more specific one from Ian in Manchester. Ian your question? IAN: Yeah my daughter is currently 15 so she would go to university in 2007 and presumably would get hit by the new tuition fees. She’s planning to study physiotherapy and I’ve seen a report that says that nursing courses are going to be free of tuition fees. I wondered if this applied to other courses ? LEWIS: Right, health courses, are they free of tuition fees Lindsey? BAKER: Hello Ian. Yes, at the moment courses that are funded by the National Health Service are free of tuition fees and they also attract either a means tested bursary or a non means tested bursary depending on the type of course that you’re doing. We understand the Department of Health have announced that tuition fees won’t be charged after September 2006 but I have – I’m going to put a caution on that because I haven’t seen that released myself Ian so I – I can’t vouch for the fact that there’ll be no fees but certainly the Department of Health at the moment try to –try to make the course free in terms of tuition fees. However if your daughter’s doing a degree and attracts the means tested bursary she will also be able to take out a student loan so she will attract graduate debt if she takes out that student loan. LEWIS: Thanks very much. Thanks for your call Ian. Cos one of the problems we have is there are now going to be four systems of student finance, so we’ve had a call from Ann who’s calling us from Glasgow about the Scottish system as well as the English one – Ann your call? ANN: Yes hello there. We’re living in Scotland as you said and my daughter is applying to attend both Scottish and English universities hoping to start next year. In financial terms would she be better attending an English university or a Scottish university just bearing in mind that Scottish courses are four years long? LEWIS: They are and of course the system of financing is different. Lindsey let me put that one to you as well and first clear up this point – if you live in one country and go to university in another country which system applies to you? BAKER: Right. If – you basically – you get your student support from the country you live in when you apply for your support so for example if you’re a Scottish student you will – you will get your student support under the Scottish system. However, excuse me – for Scottish students who are studying in England, they will – Scottish students can also get support to pay tuition fees on a means tested basis so it’s worth bearing in mind that your daughter would be able to apply for a means tested grant for fees Ann if she was to go to an English university. What tuition fees you’re charged depends on which institution you go to so, for example if you go to a Scottish institution at the moment then your daughter will probably have to pay a graduate endowment of £2000 on graduation. ANN: `Sorry…..can’t hear BAKER: Sorry? ANN: Sorry I had some interference on the line BAKER: Okay not a problem – Scottish universities charge a flat rate of £2000 on graduation at the moment so they don’t do what the English universities do so at the moment it’s probably cheaper what I say for your daughter to go to a Scottish institution under the £2000 graduate endowment. She’ll be able to pay that off when she graduates or take out an additional student loan to pay for that. At the moment for English universities your daughter would be charged the capped rate of – what at the moment £1125 a year so over a three year degree for example that will add up to more than the Scottish fees. LEWIS: And it’s worth saying Geraldine that the new bill will actually transfer to the Welsh Assembly the right to set these rules in Wales so we are going to have different rules in Wales, Scotland, Northern Ireland and England. And do we know from 2006 how that will all work? Have there been definite decisions between the different national bodies to decide how a student maybe Welsh with Scottish parents going to an English university? BAILEY: No there’s absolutely nothing definitive on that yet. So I can’t really give you any information at all on how that’s going to work. LEWIS: So that’s one of the many things that we’ve got to wait to find out the final details on so it does get certainly much – very difficult to give general advice when you have what will be four completely different systems as we will in a few years’ time ANN: And that will apply to me as I’ve got a son who’s hoping to attend university in 2006 so LEWIS: Well there we are. I think – I think some of those details but basically as we understand it the maintenance grant comes from where you live, the fees are paid where you go so you’ll have to sort out how that will work at the time. So I think it is going to get more complicated for those cross border studies. Let’s move on to Clare now who’s calling us from Staffordshire – Clare? CLARE: Hello yes. I’m actually disabled. I’ve studied with Open University a few years ago and felt it wasn’t for me – I’ve been quite ill. I’m hoping to re-enter university in September as a mature student. I don’t get disability living allowance but while I was with Open University I got disabled students allowances cos I have ME which covered you know equipment things like that. I can’t work and study. I’m wondering how I will fund support during university – if there’s any grants available to disabled students? LEWIS: Geraldine? BAILEY: Hello Clare CLARE: Hello. BAILEY: Are you planning to go full time or part time? CLARE: No, I’m going to go full time. BAILEY: Right. Okay well in addition to the fee contribution that you can apply for there are also and of course the student loan there are also disabled student allowances available for full time study in universities and those are divided into three categories: there’s a non medical helper allowance and in the coming year this is going to be £11,550. There’s also a major items of specialist equipment allowance so if you did need for example a word processor to assist in your studies then you can get a grant of up to £4565 and then of course there’s additional expenditure of £1,525 and that would be for additional equipment like note taking or something like that. So those – those means – those benefits are available if you do go into full time education on top of the loan and also the fee contribution. CLARE: I think the concern was because I’m a mature student – you know coming out of university maybe at 43/44 – you know it’s coming out with so much debt when I haven’t got a full working lifetime in front of me. So I was looking if there’s any maintenance grants BAILEY: Oh right – well it is worth pointing out that those disabled student allowances are – are a grant. They’re not repayable so it’s only the student loan you have to repay and of course you’ve also go the maintenance grant that is being introduced that you can also make an application for which you talked about earlier. LEWIS: So considerable help for disabled people and again go to a student advisor, go to your local education authority or your Scottish or Welsh equivalent and find out about that. Two very quick points: we’ve had a lot of emails, none of which I’ve really been able to get to because things have been so complicated today. We’ve had an email from John – he’s heard a number of students can finish the course, declare themselves bankrupt and get rid of their debt. Is that a good idea – does it work – Lindsey? BAKER: Well technically at the moment yes, and if you have an income contingent loan – i.e. if you studied since l998 then yes you can discharge your loan. That loophole will actually be closed through the HE bill that’s going through Parliament at the moment. Whether it’s a good idea or not – I think I’d like to ask Kevin to answer that really. LEWIS: Kevin, briefly – if you are a bankrupt how does that affect your finances – savings and borrowing? BROADBENT: It’s a good question and it’s a question I think that links with lots of student debt issues. It’s not the level of debt it’s how it affects the things that people want to do in the future such as mortgages. So if you are a bankrupt then a lot of mortgage lenders will not lend to you so you will reduce your chances of getting a mortgage if you go down that route which is going to be closed shortly. LEWIS: So can be dangerous. We’ve also had people asking if they can go abroad to avoid paying it back? - the answer is you can’t because they’ll follow you but under the new proposals debts will be written off after 25 years but that won’t happen until 2006. Anyway that’s all we have time for. My thanks very much to Kevin Broadbent from Chase de Vere, Geraldine Bailey from Middlesex University, Lindsey Fidler Baker from the NUS and thanks for your calls. We’ve been absolutely inundated. You can find out more from our website – bbc.co.uk/moneybox and there’s details there of how to contact the programme. Or you can call the Action Line 0800 044 044 I’m back at noon on Saturday with MONEY BOX and back here to take more of your calls on MONEY BOX LIVE at three o’clock next Monday afternoon. BACK ANNO: And that was Paul Lewis, the producer was Julie Ball.