Ideology drives maintenance grant cut

Amy Gilligan argues that neoliberal ideology is at the heart of the Tories’ cutting of student maintenance grants


A report this week from the Institute of Fiscal Studies shows that the government’s plan to scrap maintenance grants for students from the poorest households will mean that 40% of students will graduate with debts of over £53,000. They also show that cutting grants will do very little to lower the amount that the government spends on higher education – only deceasing it by 3%. This is because student loans in England are Income Contingent Loans and have a fixed payment term: what you pay back is dependent on how much you earn, not how much your debt is.

Graduates begin paying back when their income is over a certain threshold (for those who started university after 2012 this is £21,000, and for those before it is £15,000), the amount they pay back is 9% of their income over this threshold, and the loan gets written off after a set period of time (25 years for 2006-2012 cohorts, 30 years for those starting university after 2012). This means there will be quite a lot of people who never pay off their entire student loan: in 2010, when tuition fees were increased to £9000 a year, it was estimated around 35% of student debt would be written off. You can increase the amount someone owes the Student Loans Company (SLC), but provided the loan terms remain the same and they don’t earn more, they wouldn’t pay back more.

So what is the point in moving from maintenance grants to maintenance loans if it isn’t going to change the amount of money it ends up costing the government in the long run? One part is fancy accounting – grants count as expenditure while only the bit of loans you don’t expect to get paid back do, so the balance sheets look better right now. This is not dissimilar to what happened with the changes made in 2010 when teaching grants that were paid directly to universities were scrapped and replaced with higher tuition fees.

The bigger picture as to why they want to cut maintenance grants is neoliberal ideology. It pushes the cost of university on to the individual student, confirming the idea that you go to university as a customer for your own personal reward. This serves to fill universities with market ideology and in the long term paves the way for privatisation of the Higher Education sector.

In the immediate future I think we will have to be alert to any changes to the terms student loans – be it the rate at which they are paid back, changes to the repayment threshold (which is set to be frozen at £21,000, rather than increasing with inflation) and making the loans open ended, rather than having them written off after a fixed period of time.

Fighting for a free higher education system has to be the aim. This has to include fighting for grants for everyone to cover living costs, not just against fees, and should ensure it is linking up with those working in HE who are also feeling the effects of the marketisation of Higher Education.

For a more in-depth analysis of HE funding Andrew McGettigan’s book The Great University Gamble (2013, Pluto) is well worth checking out.


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