Reform of student loan system is too complex and may be inconsistent with Government’s Levelling Up agenda – Lords Committee

In its 25th Report the House of Lords Secondary Legislation Scrutiny Committee has highlighted several issues of concern        after considering the Education (Student Loans) (Repayment) (Amendment) (No. 4) Regulations 2022.

The Regulations introduce wholesale changes to the student loan system in England and

Wales by introducing a new set of terms and conditions for those applying for a student loan from August 2023 onwards, known as ‘Plan 5’, and making alterations to the terms of other earlier loans (Plans 1 – 4).

Concerns raised by the Committee and highlighted in the report include;

• Financial impact – The Regulations will reform the student loan system in a way that decreases the costs for taxpayers but increases the amount that students will have to repay. The Department of Education (DfE) informed the Committee that the reforms would help sustain the student finance system in the long-term, but the Committee remained concerned that the policy would leave students from disadvantaged backgrounds as “losers” due to the financial impact of increased repayments. This could be inconsistent with the Levelling Up agenda.

• Lack of consultation – The Government did not conduct a consultation on the changes made      and told the Committee the reforms built on recommendations made in the 2019 Augar Review of Post-18 Education and Funding. Given the large number of people affected, the differences between the Review’s conclusions and these regulatory changes, and the length of time since the Augar Review; the Committee expressed unease about the failure to follow best practice to implement these significant changes. The report concludes the Government should have consulted those affected before finalising the policy.

• Complexity of the student loan system – Currently student loans are organised into four types of ‘Plan’ depending on the date of the loan and the type of borrower. These Regulations introduce a new Plan 5 and make changes to Plans 1-4. DfE did not provide the Committee with a reasonable explanation of why the loan system could not be more harmonised across the different plans. The report concludes that adding an additional Plan type, with different terms, only serves to make the system more complex. The Government have offered no clear rationale for not introducing greater harmonisation into the system.

In conclusion, the report recommends the House may wish to raise the concerns highlighted with the Minister.        

Baroness Bakewell of Hardington Mandeville, Member of the Secondary Legislation Scrutiny Committee said;

“While we acknowledge the Government’s intention to make the student loan system fairer for taxpayers and students, we have several concerns about the implementation of these changes.

“The Regulations will adversely affect students from disadvantaged backgrounds which is in clear contradiction to the Government’s Levelling Up agenda. Additionally, the Government have implemented the policy in such a way as to render an already complex system so opaque and convoluted it would be very difficult to for anyone to navigate their way through it.

“DfE did not follow best practice and introduced the policy based on a review exercise conducted three years ago rather than conducting a more up to date consultation. Given the large number of people who will be affected by these changes, we find this particularly troubling and have suggested that the House seek further information from DfE to address the numerous concerns raised in our report.”

Notes to Editors

1. The Education (Student Loans) (Repayment) (Amendment) (No.4) Regulations 2022 (SI 2022/1335) were laid by the Department for Education on 15 December 2022. Parts of the Regulations came into force on 16 January 2023 and the substantive changes to loan repayment terms come into force on 6 April 2023.

2. The Regulations are subject to the negative resolution procedure and will not therefore be debated unless a Member of the House puts down a motion. Under the negative resolution procedure, if any Member wishes to object to regulations, a motion (called a “prayer to annul”) must be debated within 40 days of laying (“the prayer period”). The prayer period for these Regulations ends on 20 February 2023.

3. The Report of the Independent Panel’s Review of Post-18 Education and Funding (the Augar Review) can be found on the Department for Education’s website.