Student and Graduate Debt.

Navigation: Main page

Author: Unknown

Scottish Parliament • Debate • 26 May 2005

Fiona Hyslop (SNP, Lothians) opened a debate on student and graduate debt by saying replacing loans with grants of the same value would save public money. Murdo Fraser (Con, Mid Scotland and Fife) said that extending the student loans system would mean that students would not have to use high interest credit cards.

Fiona Hyslop disagreed, although she acknowledged that credit card debt was highly significant. She accused the Conservatives of wanting to commercialise all debt, which would compound the debt problem rather than resolving it. She pointed out that, this year, graduate students would be £19,000 in debt and would have to be earning almost £22,000 in their first year just to pay off the annual interest on the debt. She claimed that there was a growing consensus that the student loans system had failed and could not be rescued. It was a flawed system.

The Deputy Minister for Enterprise and Lifelong Learning, Allan Wilson (Lab, Cunninghame North) claimed that the Executive was doing a great deal to tackle student debt. He said that devolution had made it possible to introduce changes to the student support system for Scotland, as it allowed the removal of barriers to higher education by targeting resources where they were needed most. He claimed that the introduction of the student's bursary encouraged young people from less well-off backgrounds into higher education. The non-repayable bursary replaced part of the student loan and therefore reduced the amount of debt that graduates would have. Mr Wilson said that from 2005-06 the maximum bursary would be increased to £2,395, and the number of students who were eligible to receive the maximum bursary would increase by 63 per cent. The family income ceiling had also been increased, which meant that the number of students who were eligible for some sort of bursary to increase by more than 10 per cent.

Tommy Sheridan (SSP, Glasgow) claimed that new statistics showed that the number of students from working-class backgrounds throughout Scotland was now 17 per cent, which represented a 3 per cent drop in the past two years. He accused the Executive of failing to encourage youngsters from working-class backgrounds into higher education.

Allan Wilson did not accept that. The Executive had introduced a number of important initiatives to broaden access for people from underrepresented groups.

Murdo Fraser (Con, Mid Scotland and Fife) pointed out, that in 2004, 1,541 graduates declared themselves bankrupt. The average debt for medical students in Scotland was more than £11,000 and one in five Scottish medical students had more than £20,000-worth of debt. This was causing the BMA to be concerned about the impact on recruitment to medicine, as medical students study for longer than other students.

Mr Fraser said that the Conservatives would scrap the graduate endowment, which he claimed was no more than a tuition fee by the back door. They would also increase the repayment threshold for student loans to £20,000 and make greater sums available in loans by increasing the amount that could be borrowed to £5,000 or more per annum. He said that eligibility for a loan should not be subject to a means test and student loans could be transferred to independent providers. Instead of paying a discounted rate of interest, students would pay a commercial rate. But a Government backed scheme would have a Government backed guarantee which would mean there would be no need for excessive rates of interest.

Jamie Stone (LDP, Caithness, Sutherland and Easter Ross) claimed that students who were domiciled in Scotland saved around £5,000 by not paying fees and £9,000 by not paying top-up fees and they could receive up to almost £10,000 in grants. He said that they also benefited from the guarantee that in real terms the amount repayable on their student loans would not be more than the amount that they had borrowed. Fiona Hyslop asked Mr Stone if he was aware that graduates who earned less than £22,000 were paying more in interest than they were in debt repayment. Mr Stone said that the matter would probably be considered by the Enterprise and Culture Committee in due course. He pointed out that around 40 per cent of Scottish students worked while studying, but in England the figure was 58 per cent. He claimed those facts were chiels that winna ding.

Tommy Sheridan (SSP, Glasgow) referred to Barclays Bank's recent study, which found that average student debt, currently £16,000, was on track to double by 2010. He claimed that in five years, the average debt for graduates would be £33,000. His solution was to increase tax for high earners so that there could be a system of universal grants and proper support for education.

Mark Ballard (Green, Lothians) said that tuition fees should be abolished and replaced with a system of universal grants which would reflect the fact that both further and higher education was good for society.

Adam Ingram (SNP, South of Scotland) said that the solution was to abolish student loans and replace them with student maintenance grants. He claimed that the system would be self-funding. Currently the Executive was paying around £270 million a year on the loans scheme. Only part of that was spent on loans as a large part of it was spent on servicing the interest of the debts. He claimed that by transferring most of what was being paid out in loans to grants, the debt interest burden could be abolished. He said that in 2002-03, the cost of the student loans system was £292 million for the delivery of £227 million in loans.

RfA 20757