Diamond review: Loans 'should replace' tuition fees grant

A grant covering Welsh students' tuition fees should be replaced with support for living costs instead, a review of university finance has said.

All students would receive £1,000 a year before a means tested grant, according to an expert panel led by Prof Sir Ian Diamond.

A student from a family on average income could receive £7,000 a year.

But the current £5,100 grant towards tuition fees would be replaced by loans.

The proposals mean:

• All students would receive a minimum £1,000 a year before a means tested grant is then awarded

• At its maximum level, £9,113 a year, this would cover the term-time living costs of eligible students from the lowest income households, equivalent to the National Living Wage

• The student from an average income family could receive £7,000 a year

• The maximum level of grant would be available to students from households earning less than £20,000 a year

• Students from families earning more than £80,000 would eligible only for the basic £1,000 a year

• Instead of getting £5,100 in a grant towards tuition fees - this would be scrapped and instead students would take out a loan

Education Secretary Kirsty Williams said she endorsed the underlying principles and will now look into the detail of how they can be implemented.

No date has been given as to when new arrangements would start from although it is thought that the earliest they could be introduced is 2018/19.

The changes come amid concerns the current system is unaffordable.

Prof Diamond said higher education funding needed to be a "partnership between wider society and the individual".

He added: "In contrast to England, where maintenance support for students will be based on loans, we propose a significant universal element of maintenance support for full-time students."

Prof Diamond, vice-chancellor of the University of Aberdeen, said it would mean students from Wales would face a "significantly lower average level of debt on leaving university than those from England."

Ministers have maintained that living costs rather than fees - which can be paid back over time after students start work - are a bigger barrier to poorer students going to university.

Ms Williams said: "We want to make sure that those who wish to go on to university are able to.

"The fear of not being able to meet the cost of living on a daily basis puts many off, not the prospect of paying back loans after they are in work.

"This system addresses that issue head on, but will also mean making tough decisions to make sure the system is sustainable in the long-term."

Welsh students currently leave university with less debt on average than their English counterparts.

Figures from the Student Loans Company show that the average loan balance for Welsh students who started repayments in 2015/16 was £16,120 - much lower than the £24,640 for English students.

• Analysis: good riddance to tuition fee grants?

• Getting the balance right for students

• The politics of Welsh tuition fees

• Concerns of universities

• Timeline: Welsh student fees and grants

Since 2012, a significant portion of Welsh students' fees have been paid for by the Welsh government, wherever they study in the UK.

Universities can charge a maximum of £9,000 for a full-time undergraduate course but Welsh students only cover the first £3,900.

The rest has been paid for by the taxpayer - at a cost of £237m in 2015-16.

Universities have argued that Welsh higher education loses out on tens of millions of pounds in grants paid to English universities, through the fees of students who go over the border to study.

They had called for the tuition fee grant to be scrapped, and subsidies focused on the poorest students.

The National Union of Students (NUS) in Wales said: "We are sure that doing more to support people to get into university by helping with their immediate costs is a positive step forward".

Universities Wales, which represents higher education institutions, said it would also allow universities to be sustainable into the future, including funding for higher cost subjects like medicine and for research.

Wales would also be the first UK nation to offer maintenance and tuition fee support for students right though into post graduate study.

"That's extremely progressive and a unique opportunity for Wales," Universities Wales chairman Prof Colin Riordan said.

The policy as a whole is thought to be cost neutral compared to the current system, but the changes in undergraduate study could save the Welsh Government around £100m a year.

STUDENT FINANCE: CRIB SHEET

Name: Leah Williams

Age: 19

Where are you from? Cardigan

What year and what are you studying? Second year politics and international relations, Cardiff University

How are your tuition fees paid for - do you get a grant and have you taken out a tuition fees loan too? I received a grant and I've taken out a loan. I certainly would not have gone to university without the grant from the Welsh Government.

Do you receive a maintenance loan towards living costs? Yes

How much do you pay in rent a term? £1,020

Do you have a part-time job? Yes

If so, what is it - and roughly how much does it pay? I have two jobs - one pays £5.20 an hour and the other is £7 an hour. Living cost is a big deal. I had to pay nearly £1,000 rent over the summer, I had to work and budget because I had rent to pay.

Have you received help from your family in the last 12 months? Yes, help with my summer rent.

If so, is it a regular amount? No

Do you run a car? No

Is there anything you can't afford but wish you could at the moment? No

Have you an estimate at how much you think you will owe in student loans by the end of your course? £20,000

All parts of the UK have different systems of student support:

• English students do not get a grant towards their tuition fees

• Scottish students who study in Scotland do not pay any fees

• In Northern Ireland students pay reduced fees if they study at a home university.

University and College Union general secretary Sally Hunt said she was pleased with the proposed improvements in maintenance support.

"It is however a shame that fees are likely to rise will rise and result in increased debts for students on graduating," she added.

The Welsh Conservatives said they have "always believed that support should be targeted at those who need it most to ensure that everyone can aspire to a university education, no matter what their background".

UKIP's Mark Reckless, whose party went into the election promising to keep tuition fee grants for students who study in Wales, expressed concerns that the new system for undergraduates would not be affordable.

"While we welcome appropriate support for students, and a more generous system than is on offer in England, we would question whether it's affordable to fund maintenance grants on such a basis going so far up the income scale paid by people who are much poorer," he said.

Ahead of the publication of the report, Plaid Cymru said it was confident that Prof Diamond would come to the conclusion that the system was "unsustainable and needs to be replaced".