FE Loans: what’s the ‘interest rate’, now?

Mike Cooper writes about the current state of play regarding the Advanced Learner Loans, and some of the key issues underlying the topic. This piece is an adapted version of an article that appeared in ‘FE Week’ on 21si April 2014.

When I wrote this April about the second round of FE Loans, the new application process had just opened. A few months on, what’s happening? Where are things heading?

Spreading the payments?
Most notably, moves to extend FE Loans ‘downwards’ (both for age and level) has begun; many preparing for the 2013-14 round saw this as inevitable, for several reasons. A recent BIS consultation makes several proposals. If adopted, loans to cover fees will also apply to 19-23s taking certain kinds of Level 2 learning, in addition to 24+ learners taking Level 3/4 courses. HNC and HND funding would move from the university sector into FE’s orbit, and Loans. Part of that reflects concerns over ‘bogus’ colleges and learners; FE arrangements are easier to monitor.

Some providers didn’t engage with that first round, though, since they had few or no learners over 23, and/or little or no learning beyond Level 2. Some may even have retreated from those ‘older’ and/or ‘higher’ fields.

If the consultation’s suggestions are adopted, however, they may well apply to courses from August 2015. Thus, many FE providers not much involved with Loans may need to re-consider their strategic and operational positions, to plan for tis coming year, and implementation thereafter.

There’s also proposals to making loans more acceptable to some Muslim learners. I’ll discuss that below.

Loans in mind?
Having been involved in LSIS support for providers towards the first round of Loans, I’m convinced that successful and less successful FE Loans ventures depend first and foremost on attitude and mindset within providers. That strongly affects the ‘mood music’ throughout all parts of the organisation, and its community, and that can have big impacts on messages and take-up. Where it’s in a minor key, learners can walk away, and everybody loses. Those who were doubtful or even hostile had their reasons, of course. But if that restricts or even prevents participation, then there’s a problem for us all.

Loans for many kinds of FE learning aren’t going away (a general election notwithstanding), and indeed, their territory is spreading. So it may be time to embrace the concept more wholeheartedly. Even those with real philosophical doubts should see some real potential advantages.

That can be a ‘tough ask’, whether at the strategic level and/or at the front line. Investing in your post-school education and training just isn’t as strong a tradition or philosophy in Britain as it is elsewhere. Things may be changing, but perhaps not quickly and solidly enough. And such mindset matters are the bedrock of systems and success.

Watch the figures?
One possible new sign of continued hesitations, despite some encouraging statistics, lies in the set of April-May 2014 figures for the new round of 24+ Loan applications. Where we might have expected increases compared to the corresponding period last year, through the system settling and building momentum, take-up so far this time looks to be around half of the same period in 2013.

It’s early days; there may be many explanations. But, even given the removal of Apprenticeships (which accounted for few applications last time, anyway), the picture so far raises some concerns. How many learners may have been put off, for whatever reason? What’s been the impact of ‘mindset’?

Perhaps it will indeed turn round, over coming months. Yet, a total Loans budget of £129 million for the 2013-14 financial year was apparently by no means fully used,. For this financial year, that’s more than tripled to £398m. The trend needs to be much more sharply upwards, soon. If not, then the implications for the sector, and the nation, are a worry – and particularly given the shrinking of the ASB, and the proposed ‘double-downwards’ expansion. This income-stream matters, and increasingly so

Take a fuller look at ‘takaful’?
Finally, here’s a bit of ‘wish-fulfilment’. An earlier BIS consultation considered how loans for HE could accommodate the beliefs of many Muslims, for whom the conventional ideas of borrowing and interest are unacceptable. The likeliest system to be adopted is one based on the concept of ‘takaful’: shared benefit and obligation. Simply put, this involves a fund built up by a community, allowing its members to draw on the money contributed. They then contribute back into the fund in turn, as and when possible.

It’s an interesting approach. And, it’s a quite familiar one in some parts of the Western world, especially England: think of the ideals and methods of the early co-operative movement, ‘mutuals’, and friendly societies.

The BIS consultation suggests that this could also happen for FE Loans. A logical question arises: if such a ‘takaful’ system can be used for Muslim learners, both in HE and FE, why couldn’t it also apply to all learners?