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Maintenance Grants to be Replaced by Loans

Controversial plans to scrap the maintenance grant have prompted some of the most heated discussions in recent years.


The maintenance grant was initially conceived in order to help those with a low annual income to cover their living expenses while undertaking studies at full-time undergraduate level.


Up until Chancellor George Osborne’s announcement of plans to scrap the maintenance grant, those from families with an annual household income of £25,000 or less were entitled to a apply for a grant of up to the value of £3,387, dependent on their financial circumstances, and many mature university students also made use of the grant in order to support themselves during term time.


During his July 2015 budget speech, the first delivered by a Tory majority government since 1996, Mr Osborne announced that the maintenance grants had now become “unaffordable” as the government continues with an aggressive policy of austerity to combat the national debt. Some anti-austerity campaigners were critical of the move, claiming that many prospective students from low-income and middle-income families may now be deterred from entering the higher education system due to the high level of debt assigned to them post-graduation.


Although the final details are yet to be confirmed, it is thought that some measures and incentives will be introduced to encourage those from poorer backgrounds to continue with their studies, such as allowing some students to receive grants but drastically reducing the qualification cut-off points to those from the very lowest income brackets only.



What now for those on a low income?



Despite stories in the media that the maintenance grant has been scrapped, there will still be financial help available for students in the form of personal loans, which will be introduced from the 2016/17 term. These maintenance loans will be subject to the same repayment terms as the current tuition fee loan system.


Receiving maintenance help in the form of a loan may not be a particularly bad thing for some students – the maximum value of funding received is set to increase to £8,200 interest free, with graduates paying this back once they are earning over the £21,000 per annum threshold – the philosophy espoused by Chancellor Osborne is that the benefits of achieving a degree outweigh the negatives of having to pay for the privilege, and that it would be “unfair” to expect the taxpayer to finance the higher education of the individual. Others, such as Sir Peter Lampl, disagree.


Sir Lampl, who chairs the Sutton Trust and is a member of the Education Endowment Foundation, an organisation which encourages those from deprived backgrounds to enter higher education, believes that the current grants system encouraged an increase in participation by those from lower social and economic backgrounds – a demographic which he advocates will be put “at risk” by the latest budget plans, as increasing numbers of young people make the decision to avoid becoming too heavily burdened by student debt.


Are loans the answer?


Debates on the ethics of lending within the world of education have raged since the initial student loans were introduced, although the current shake-up is arguably the most controversial change to student finance since tuition fees became payable back in 1998.


One thing is for certain – for many, if not most, completing a three year course of study will involve a loan in one form or another, and in some cases students will utilise a combination of financing options from a number of different lenders. Today’s students are more likely to fund their studies with interest-free student overdrafts and other personal loans on top of their maintenance grant; a trend which is likely to continue when maintenance loans are introduced in September next year.

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