Time to protect learners from the FE loan scandal

28 Feb 2017 03:45 PM

Blog posted by: Nick Linford, Writing exclusively for NCFE, 28 February 2017.

FE loans are a relatively new way to fund courses but through no fault of their own, adults are already being left with government debts for cancelled courses.

The short-term solution for government, to write the debt off, is both simple and obvious. But it is important to also learn from why and how the loans were introduced.

Before August 2013, people aged 24 or over that started a vocational course at level 3 or above would have typically shared the cost with the government.

For example, someone looking to change career and get qualified as a personal fitness instructor might pay £1,500 and the Skills Funding Agency (SFA) on behalf of the government would pay the other £1,500.

The college or training provider would then have £3,000 to deliver a level 3 qualification in personal fitness instruction.

This co-investment funding model as it’s known, where the costs are shared between the learner and the government, had been working well for many years.

However, the government obsession with cutting departmental budgets by up to 40 percent changed all that when they converted both the £1,500 learner and the £1,500 government contribution into a loan.

An advanced learning loan, as they were named, isn’t classed as government expenditure, so as far as the Treasury is concerned a budget cut had been achieved.

In the example above, the full £3,000 is paid to the college or training provider by the Student Loans Company (SLC).

The learner pays nothing until after the course finishes and, like a loan to study at university, only once they are earning over £21,000 and with a relatively low interest rate.

So assuming the learner is still willing to take out a £3,000 income contingent loan the provider still receives their funding and the provision continues.

So far so sensible, but now comes the insanity.

The SFA gave people running companies with no history of receiving public funding access to millions in loans cash from the SLC.

These people would fill out online forms with the SLC to receive the funding and often pay other companies to deliver the training via subcontracts.

The sadly predictable outcome of giving a few individuals access to millions in public funding is a growing list of liquidated companies and thousands of learners with debts for courses they are unable to finish, as increasingly reported in the pages of FE Week.

The SFA has slowly begun to address the problem, by tightening up the way they set and increase access to loan funding, as well as gradually banning the use of subcontracting.

But they also need to acknowledge their early failings by changing their policy towards learners left with debts for courses they cannot complete.

Cancelling the loan for these learners would not only end an injustice – it should also be a simple policy to implement, given this is already what happens for others.

Learners using loans for level 3 Access to Higher Education qualifications don't have to pay them back if they go on to pass a degree, a policy the then skills minister, John Hayes, implemented.

The current skills minister, Robert Halfon, should now ensure learners let down by a negligent SFA should also have their loan written off.

It really should be an easy policy change to end an obvious injustice.

Over to you Mr Halfon.