| New research shows that loans are important to many disadvantaged students but that some, particularly women and Asians, are still reluctant to borrow. |
| The report, by the independent Policy Studies Institute, shows that the overall take-up of student loans is high, particularly for the more disadvantaged groups including those from poorer households and those who are themselves lone parents. However, the report’s findings also highlight some problems with the present scheme. Some students are unwilling to take out a loan because they are concerned about the burden of debt and it is possible that some people are currently being deterred from going to university by the present loan scheme. |
| Student Loans: who borrows and why ? by Joan Payne with Claire Callender, was based on a survey of 1,971 students in 72 institutions of higher education, conducted in 1996. Three in five eligible students took out a student loan in 1995/96, and most borrowed the largest sum they could. |
| The report highlighted the importance of loans to many students. Financial need was the reason why three quarters of borrowers took out a loan and there were particularly high take-up rates among the most disadvantaged students. |
| Nearly two thirds of students who did not take out a loan had concerns about borrowing - and women were more likely than men to have such worries. The report concludes that, under the current system, ‘some students - especially women - appear to be averse to the idea of debt and may be deterred from entering higher education for this reason . |
| For those students aged under 25, the likelihood of taking out a loan was closely related to parental income, with loans being particularly important to those from the poorest households. |
| Students who were themselves lone parents had particularly severe financial difficulties and were more likely to take out loans than others. |
| The loans system is also of particular benefit to students who do not receive the full assessed parental contribution to maintenance. One in eight of those students who live away from home, and whose parents were expected to contribute, faced this problem, which was most severe amongst students in the 20-24 age group. |
| Students who raised money from other sources, such as term-time working or by taking out commercial loans, were also more likely than other students to take out a student loan. |
| A quarter of those who did not take out a loan said that they had no need of the money. This included some students who lived at home and some students who received extra financial help from their parents. However, some well-off students also took out loans to take advantage of the favourable zero real interest rate. |
| Asians were also considerably less likely than whites to take out a student loan, possibly connected with a lack of information about how the scheme worked. However, lack of information did not affect take-up amongst the majority of students and previous PSI research shows that most students have a fair understanding of the existing student loan scheme. African- Caribbeans had similar rates of take-up to whites. |
| Joan Payne said: ‘Women and Asian students are at greatest risk of being deterred from entering higher education by the current student loan scheme. Some may be put off simply by the idea of getting into debt. In introducing the new scheme the Government needs to consider how we can avert these problems without promoting a culture unworried by debt. |
| Claire Callender said: ‘Educational qualifications are an important route into work for lone parents and they are especially dependent on student loans. Attention must be paid to the degree to which current funding arrangements might encourage or discourage their entry to higher education.’ |
Contact: Neil Churchill on 0171 468 2236 (direct line) 0374 756 920 (mobile)
Notes for Editors:
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9/10/97