Higher Education: Finance

Department for Education written question – answered on 16th July 2020.

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Photo of Neil O'Brien Neil O'Brien Conservative, Harborough

To ask the Secretary of State for Education, after accounting for changes to the classification of student loans, how much (a) was spent on higher education in each of the last 10 years and (b) has been allocated in each year of the forecast period.

Photo of Michelle Donelan Michelle Donelan Minister of State (Education)

Higher education spending is reflected in the national accounts in different ways. Net spending by government on higher education over the year contributes to Public Sector Net Borrowing (PSNB), also known as the deficit.

Grants to students and providers are government spending and increase the deficit. The recent classification decision by the Office for National Statistics (ONS) changed the way that student loans contribute to the deficit. Under the reclassification, the part of the maintenance and tuition loan which is not expected to be repaid is considered spending and increases the deficit. Any accruing interest which is expected to be repaid is considered as income, decreasing the deficit. The difference between spending on loans which are not expected to be repaid and expected interest income represents the net spending by the government on student loans over the year.

More detail on the reclassification by the ONS is at: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide.

A table summarising the total deficit cost of higher education is attached. Figures are not yet available for the 2019/20 academic year.

Historic information on student loans is published by the Student Loans Company and available at https://www.gov.uk/government/organisations/student-loans-company/about/statistics.

The Office for Students (OfS) is responsible for distributing funding to the sector on behalf of the department. Details of future teaching grant allocation budgets from the department to the OfS are published at https://www.officeforstudents.org.uk/advice-and-guidance/regulation/guidance-from-government/.

The Office for Budget Responsibility publishes the forecast impact of student loans on PSNB. This is available in table 3.24 of the ‘March 2020 Economic and Fiscal Outlook’: https://cdn.obr.uk/EFO_March-2020_Accessible.pdf. These figures include student loans funded by the devolved administrations and the department.

70489_table (PDF Document, 88.65 KB)

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