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Power to make alternative payments

Part of Higher Education and Research Bill – in a Public Bill Committee at 4:00 pm on 13th October 2016.

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Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy), Minister of State (Department for Business, Energy and Industrial Strategy) (Universities and Science) (Joint with the Department for Education) 4:00 pm, 13th October 2016

No, it is not right. The historical record will show that the original RAB charge projections ended up being more or less in the ballpark. The RAB charge is estimated by the Department now to be between 20% and 25%. The real thing that changed was that earnings did not rise as rapidly as we expected, which meant that fewer people were repaying and the cost of providing the loan system to the taxpayer would therefore be higher than anticipated. When the policy was introduced, the threshold of £21,000 was about 75% of expected average earnings in 2016. Updated calculations based on earnings figures from the Office for National Statistics show that figure is now 83%, reflecting weaker than expected earnings growth over the intervening period. The proportion of borrowers liable to repay when the £21,000 took effect in April is therefore significantly lower than could have been anticipated when the policy was introduced. That is the issue. I will now carry on.

The current funding system is fair to students, graduates and taxpayers. We must also ensure it supports all eligible students, irrespective of their religion. Ever since student loans were introduced there have been concerns about their impact on Muslim prospective students, who might consider they are not consistent with the principles of Islamic finance. Those concerns were backed up by our research, which shows that Muslim students make less use of student loans than their peers. Clause 78 sets out our intention to provide the Secretary of State with the power for the first time to offer alternative payments alongside existing powers to offer grants and loans. We believe clause 78 will help advance equality of opportunity by allowing the Government to provide a new form of financial support for students who feel unable to access interest-bearing student loans due to their religious beliefs.