Student financial support in Scotland: independent review

Recommendations for improving the higher and further education student support system.

A New Social Contract for Students


  • Fair funding; entitlement to a Minimum Student Income
  • Parity of financial support
  • Clarity of funding

93% agreed that there should be parity of financial support”

“Fair funding
85% said there should be a minimum income guarantee across all students”

74% gave examples of rules and practices that made it harder to access or maintain study”

The key provisions of the New Social Contract for Students put forward by the Board are:

  • Students should be entitled to a Minimum Student Income based on the Scottish Government’s Living Wage for the time they spend studying. For most students this is calculated to be £8,100 per academic year.
  • Both further and higher education students should be entitled to receive the same Minimum Student Income.
  • The Minimum Student Income can be augmented by paid work during term time which – in line with the Cubie Review [5] – should not be more than 10 hours per week.
  • Bursaries should continue to be focused on those from the poorest backgrounds. We recommend that the current means-testing process should continue and should be harmonised over time between further and higher education in the interests of parity.
  • The approach to students on benefits should be revised so that no student is worse off as a result of a positive decision to enter tertiary education.
  • Students should be expected to complete their studies by maintaining appropriate standards of attendance. National guidance should be introduced which is both fair and flexible and consistent across further and higher education.
  • Students should have flexibility around when they receive their money. For example, they could choose a per term or a monthly basis, with the option of spreading payments over twelve equal instalments.
  • Carers, parents and disabled students should continue to have access to additional support through the existing non-core funding such as the Disabled Students Allowance and the Lone Parent Grant. And in exceptional cases applications can still be made to discretionary funds.
  • The New Social Contract and Minimum Student Income should be extended to Care Experienced students, based on the Scottish Government’s current policy of providing full non-repayable bursaries.
  • The whole approach should be effectively administered and communicated clearly and concisely to ensure that it is well understood and efficiently administered.


  • Entitlement to a Minimum Student Income in both further and higher education
  • Minimum Student Income of £8,100
  • Certainty and clarity about funding

“Too many people have had to leave further education to go and find a job because they can’t afford it.”
Student Dumfries and Galloway College


Throughout this Review we heard evidence, particularly from further education students, that the discretionary nature of bursary funding creates unfairness, uncertainty and anxiety. In our consultation, there was clear support for a Minimum Student Income across both further and higher education, which will give students certainty and clarity about funding.

Our YouGov research found that 40% of students felt that financial support was poor in meeting their needs. 70% of students had to supplement the financial support they receive. 14% of these students topped-up their finances with credit cards or other types of loans, including payday loans – with those in the lowest household income brackets more likely to supplement their income in this way. The Board agreed that this is an outcome which should always be avoided.

During our focus groups, we repeatedly heard that work placements cause financial hardship either because they are not funded or because they require expensive travel or materials. This can cause specific challenges particularly in remote locations such as the Highlands and Islands. In one example, a college student from Barra had a work placement on the mainland because no equivalent placement could be offered closer to home. However, the additional travel and accommodation costs involved were not fully funded.

During our public consultation we asked what a minimum income should be. There was widespread support for linking student funding to the Scottish Government’s Living Wage. Only seven respondents did not support this, citing concerns about the possible impact for students on benefits – an issue we have addressed elsewhere in our recommendations for students on benefits.

How has the Minimum Student Income of £8,100 been calculated?

The Board unanimously agreed that students should be entitled to an amount based on the Scottish Government’s Living Wage for the time they spend studying. There was widespread support for this in the public consultation.

We have based our calculations on the assumption that most students are in academic session for approximately nine months of the year. Based on a Living Wage of £8.45 per hour*, this equates to £8,100 per academic year for most students.

More specifically, the £8,100 is calculated on the following basis:

  • Scottish Government’s Living Wage: £8.45 per hour
  • Notional hours of study per week: 25 hours
  • Weeks per academic session : 38 weeks
  • £8.45 x 25 hours x 38 weeks = £8,027
  • Rounded to £8,100

This can be augmented by external work which should be of no more than ten hours a week (as per previous research findings in the Cubie Review). In a normal week, therefore, students could expect to receive support for a notional 25 hours of study out of a typical 35 hour working week.

* Based on the Scottish Government’s 2016-17 Living Wage as at the time of the final Board meeting on 26 October 2017.

Based on the maximum average number of weeks per year across colleges and universities that offer full-time further and higher education courses.

Why the Scottish Government’s Living Wage?

During the consultation there were a number of calls for any minimum income guarantee to be linked to the Scottish Government’s Living Wage, as calculated by the Scottish Government on an annual basis.

Why 10 hours of work?

We believe it is fair to assume that the Minimum Student Income can still be augmented by employment or other sources. In order to protect the interests of students and to support them to study effectively, the Review supports the recommendations from the Cubie Review – which advised that employment for students should be for no more than ten hours a week during term time (Student Finance ‘Fairness for the Future’, the Independent Committee of Inquiry into Student Finance).

Means-testing in higher education – current approach

The current approach in higher education is to apply means-testing to both bursaries and loans. This means that students from lower income backgrounds can receive higher amounts of bursaries and loans on a sliding scale relative to household income, as illustrated in the table below.

One of the results of this approach is that students from the lowest income backgrounds graduate with the highest levels of student loan debt. This is an issue which has been highlighted by a number of academics [6] .

Household Young Students
(Dependent Students)
Independent Students
Income Bursary Loan Total Bursary Loan Total
£0 to £18,999 £1,875 £5,750 £7,625 £875 £6,750 £7,625
£19,000 to £23,999 £1,125 £5,750 £6,875 £0 £6,750 £6,750
£24,000 to £33,999 £500 £5,750 £6,250 £0 £6,250 £6,250
£34,000 and above £0 £4,750 £4,750 £0 £4,750 £4,750

Means-testing in further education – current approach

Unlike in higher education, there is currently no national and consistent means-testing process to determine the eligibility of further education students for bursaries. Bursaries are determined locally by individual colleges and allocations are discretionary. Students studying for the same qualification with the same socio-economic backgrounds can receive different levels of financial support – based on when and where they made their applications, not on their need. This can lead to inconsistent outcomes depending on location, which some refer to as a ‘postcode lottery’ for student funding.

Our recommendations will address these inconsistencies through the provision of a guaranteed Minimum Student Income for both further and higher education students. In addition means-testing will be restricted to bursaries.

Household income Remaining award
Less than £24,275 £3,157.41*
£24,275 £3,112.41
£35,000 £1,978.26
£41,735 £1,264.74
£45,000 £918.83

*This is an example maximum bursary from a particular college for illustrative purposes based on a bursary of £3,157.41. Amounts can be different in each college. The illustrative maximum used in our costings is £3,195.

“Education should be a way out of poverty, not into it.”
Student Parent

The New Social Contract: entitlement to £8,100

There was universal support during the Review for parity across further and higher education, with all students being entitled to the Minimum Student Income of £8,100, regardless of household income.

Our recommendation for the Minimum Student Income gives students vital certainty, clarity and consistency on core funding levels for the duration of their course. It would bring to an end the variable discretionary bursary funding which currently operates in further education. It would bring Scotland into line with other international comparators who do not differentiate between further and higher education in overall funding levels. And the entitlement to the Minimum Student Income can be delivered without negatively impacting students on benefits.

The New Social Contract: means-testing for bursaries

We recognise that bursaries are a vital form of support for those from the lowest income backgrounds. Bursaries can help to close the attainment gap. They also assist those from the lowest income backgrounds to receive their entitlement to the Minimum Student Income without relying solely on student loans or other forms of debt.

We therefore recommend that bursaries should continue to be means-tested to ensure they are allocated fairly. The differing approaches taken to bursaries in further and higher education should be harmonised over time.

In summary, our recommendations on fair funding are:

  • Entitlement to the Minimum Student Income of £8,100 in both further and higher education
  • Delivered through bursaries and, for those who wish, student loans
  • Means-testing of bursaries to target support for those from the poorest backgrounds
  • Harmonisation of the means-testing process between further and higher education over time

Understanding the context

The Board recognises the general concerns that student loans should be avoided, as it is perceived that they trap students with a long term debt burden. Indeed, this concern is shared by a number of members of the Board.

However, the Board took a fresh look at the terms of student loans available in Scotland, and worked on enhancements that can be made to ensure that students in Scotland can be offered the best lending terms that are available anywhere in the United Kingdom.

Current student loan terms in Scotland and comparisons

Before describing our recommendations, it is important to understand the context of student loans as they currently operate in Scotland, including comparisons with other parts of the United Kingdom.

Currently Scottish students studying undergraduate higher education courses in Scotland are at an advantage over other students in the rest of the United Kingdom. This is partly because they do not have to pay any tuition fees which are funded by the Scottish Government. As a result, the total maximum annual borrowing of students in Scotland is lower than elsewhere in the United Kingdom, as shown in the table below:

Table: Maximum student support, low income higher education students living at home, by country of domicile (studying in home country, not in London)

Maintenance grant Maintenance loan Total maintenance Tutition fee grant Tutition fee loan Total fee Total annual borrowing
Scotland (example based on under 25) £1,875 £5,750 £7,625 £0 £0 £0 £5,750
Wales £5,161 £2,778 £7,939 £4,954 £4,046 £9,000 £6,824
Northern Ireland £3,475 £3,750 £7,225 £0 £4,030 £4,030 £7,780
England £0 £7,097 £7,097 £0 £9,250 £9,250 £16,347

In addition to lower annual borrowing figures, the interest rates for Scottish student loans are lower than the equivalent rates for England. Our research showed that this advantage was often not appreciated by Scottish students or some practitioners. The different rates are shown below:

Table: Comparison of current English and Scottish loans

Interest rate Repayment threshold Write-off
Scotland Lowest of RPI or 1% above the BoE rate (currently set at 1.25%) £17,775 35 Years
England RPI plus 3% while studying. Varies with income when students start to repay:
- £21,000 or less – RPI
- Between £21,000 and £41,000 – RPI plus up to 3.1%
- £41,000 and above – RPI plus 3.1% (currently 6.1%)
£21,000 30 Years

Consultation on student loans

In our consultation we asked for suggestions for improvements in the terms and conditions of student loans. The main theme to emerge was the need to reconsider the repayment threshold.

Several of the respondents, particularly individuals and those from the student representative and university groups, wanted to see the threshold increased from the current amount of £17,775. Some suggested the threshold should be brought in line with other nations of the United Kingdom or aligned with the Scottish graduate starting salary (currently the median higher education graduate salary is £22,000).

Additionally, we received many consultation responses which commented on interest rates for student loans. The suggestions for interest rates were that they should:

  • be a maximum of 1% above bank base rate;
  • be a guaranteed interest rate for the life of the loan;
  • be more favourable than commercial loans;
  • not exceed mortgage interest rates and should drop when rates drop;
  • be competitive and transparent; and
  • be matched to base rate and change in line with inflation.

Consultation feedback

Loans in further education

Almost half of respondents who replied to our public consultation voiced support for access to student loans across further and higher education. A third of responses urged caution around the introduction of student loans to further education, with particular concern from these respondents about:

  • any consequent reduction in benefits or bursaries;
  • the increased level of debt in general; and
  • the level of debt for further education students who progress to higher education.

The Board carefully considered the extension of student loans into further education and addressed the consultation concerns as follows:

Concern: Proposed:
1) The entitlement to student loans in further education could impact students receiving benefits A new approach for students on benefits, described later in this Report
2) The entitlement to additional student loans would be funded by the reduction in bursary levels No reduction to bursaries. Indeed, bursaries enhanced for students from the poorest backgrounds in further education
3) The introduction of student loans would increase the level of debt
  • Bursaries weighted toward those from lowest income backgrounds
  • Student loans minimised in further education – in most further education colleges, loans would be for the duration of a one year course.
  • Students in Scotland would continue to enjoy the lowest levels and costs of annual borrowing to fund their studies
  • Loan terms will remain the best in the United Kingdom
4) The level of debt for further education students who then progress to higher education Complete write-off of further education loans when a student goes on to higher education and then completes their higher education course


Taking into account the consultation responses and recognising the inherent advantages of Scottish student loans, the Board recommends that student loans are:

  • charged at lower of either 1% over Bank of England base rate or RPI (Retail Price Index). For comparison, interest rates on Scottish student loans are currently 1.25%, whereas in England they are between 3% and 6% – depending on earnings.
  • repaid only when a student earns £22,000 – the median graduate salary in Scotland. The Scottish Government should consider increasing this to £25,000 based on current proposals in England. This additional increase would cost around £27m per year.
  • written off in full to the extent they are unpaid after 30 years rather than the current 35 year period.

To address the concern regarding the extension of student loans to further education students, the Board recommends a write-off of further education loans where a student goes on to higher education and then completes their higher education course.

This protects those with longer learner journeys and would benefit the c.11,600 students who follow the path from further to higher education in Scotland today. Further work will be required to scope out the precise terms of the write-off in order to ensure a fair and consistent approach.

It should be emphasised that students should be able to access student loans to the level they require up to the Minimum Student Income. There is no intention to make it mandatory to take any or all of the amount of the loan available.

In summary, to enhance the quality of student loans in Scotland we recommend:

  • Further education loans written off in full when a student goes on to higher education and completes their higher education course
  • Repayment threshold increased to £22,000 – the median graduate salary in Scotland
  • Write-off period reduced from 35 to 30 years
  • Interest rates to continue at the lowest of RPI or 1% above Bank of England Base Rate

Parity of financial support


  • Common funding systems approach for further and higher education
  • Enhanced by local face-to-face support
  • More choice for students around when they receive financial support


During our evidence gathering we found considerable differences in the administration of funding in further and higher education.

In recent years there has been very little macro-level reform to the system of support in further education. Student funding in further education has been on a discretionary basis and is designed to work in tandem with the benefits system. However, the allocation of funding has been inconsistent. As explained earlier, the level of bursary awarded depends on which college the student applies to, when they apply and how much budget remains available at the point of application. Students find this approach confusing. It also makes the monitoring of student support applications across colleges more difficult, given the individual approaches taken by each college.

Common funding systems approach

During our Review, we heard that students find the current system confusing and time-consuming to navigate. Some students were asked for financial information and other types of evidence multiple times. These tend to be students with additional support needs, whose applications can be far from straightforward.

The Student Awards Agency Scotland ( SAAS) system does not interact regularly with other national government systems such as Her Majesty’s Revenue and Customs ( HMRC) and the Department of Work & Pensions ( DWP). Students are asked for parental documentation which, particularly for those students who are estranged, can be difficult to obtain. These issues can cause delays in the distribution of bursaries and student loans and we repeatedly heard how they can cause hardship and anxiety for students.

During the public consultation we asked ‘how could the administration of student support funding be improved and made fairer?’. 73% of respondents answered and some of the suggestions included the need for:

  • a single, centralised funding application and system for colleges and universities; and
  • local face-to-face support, particularly for those who need additional support due to their personal circumstances.

“I’m pulling out now because if that’s how stressful a form on a computer is, to deal with your money, what is the course going to be like?”
Student Inverness College

“Colleges agree that it would be beneficial for the sector to have one system for processing applications for support.”

The Board concluded that the most effective way to deliver the New Social Contract is through one common funding system across both further and higher education, supported by local face-to-face support. This would include a common data system and a central budget. Implementation will require more in depth system analysis. There may be associated costs to achieve this, and this should be considered in more detail during implementation.

A common funding system will promote consistency of support for all students and ensure that the right payments are made to the right individuals – all on time.

The move to a common funding system will result in a significant improvement in the central management information ( MI) available across further and higher education. It should also make data sharing, where appropriate, easier between the various parties, including SAAS, HMRC, DWP and the Student Loans Company ( SLC). This will help to minimise mistakes and delays in funding.

Face-to-face support

It was clear from our evidence gathering, particularly our focus groups, that support staff in colleges and universities are vital to the student support process. And, whilst the New Social Contract will be simpler and easier to understand, local support staff will remain an essential point of contact, especially for students who require additional support. In particular, discretionary funds will continue to be administered locally by colleges and universities, recognising some local variations in individual student needs.

The Board welcomes the commitment of student support staff, particularly in colleges, and notes that they will be essential in the effective implementation of the recommendations of this Review.

“Funding is not consistently available. It varies by college and area and so does the information about how to access it.”

Timing of payments

We heard clear evidence that both further and higher education students would benefit from more flexibility on the timing of financial support. This is particularly the case where students have entered into rental agreements which cover a 12 month period, but where funding is drawn down over a shorter period – an issue that regularly came up in our focus groups.

During the public consultation we asked ‘how could the delivery of financial support be improved?’. 65% of respondents commented and some of the suggestions included the need for:

  • flexibility to spread payments over 12 months if students prefer;
  • flexibility within the system to deal with individual circumstances;
  • a choice of payment dates to suit money management; and
  • payments to help cover upfront costs such as rent deposits.

We recommend that students should be given choice on the timing of payments, within a set of pre-defined parameters tailored to student needs.

In summary, to achieve parity of financial support we recommend:

  • A move to a common funding system across further and higher education, with local face-to-face support
  • A common data system and a central budget
  • Flexibility for students, within parameters, around when they can receive financial support

“It is important that the way support is paid to students is flexible enough to support them with significant one-off expenses, such as rent deposits.”

Education Maintenance Allowance ( EMA)

The means-tested Education Maintenance Allowance ( EMA) is used in colleges for students aged 16-19. On occasion this is used as a substitute for bursary for 18-19 year olds at college. It is paid in arrears at £30 per week and students must achieve 100% attendance to receive the payment.

The Board heard that the current application of EMA is inconsistent across colleges. As an initial step to promote fairness and parity, it is recommended that greater consistency is introduced in the award of EMA to students in colleges. Furthermore, the attendance criteria should be revised to be flexible and fair. They should be agreed at national level and administered at local level.

We recommend that further work is undertaken to review the use of EMA in further education, with input from key stakeholders.

Part-time students

Part-time students are not currently eligible for the core package of financial support for living costs, but they can apply for discretionary funding and this is important for those on benefits.

In considering this aspect of our work we received evidence from the public consultation and via focus groups from organisations such as the Open University Scotland. Common themes included the complexity of the application process, a lack of information on support available and issues regarding the relationship between benefits and student support.

Suggestions for a better approach included:

  • more information on what is available to students, particularly part-time students who sometimes find it harder to understand what is available to them due to the nature of their study;
  • advice in an uncomplicated format, in plain English, that students can easily digest;
  • a dedicated website for part-time students to access advice;
  • an online calculator to determine eligibility for funding; and
  • availability of student loans to part-time students.

We have addressed many of these suggestions through our other recommendations, particularly on clarity of communications and a common data system.

As there are over 230,000 part-time students in Scotland we recommend that the Scottish Government works, in collaboration with other interested parties, to look at how the key principles of this Review should be implemented for the benefit of part-time students. The Scottish Government should consider the application of any enhancements in support for full-time students on a pro rata or other reasonable basis for part-time students.

Parity for disadvantaged groups

During our Review we received evidence from a range of inclusion groups and organisations, including Borders Carers Centre, The Centre for Excellence for Looked After Children in Scotland ( CELCIS), the Equality Challenge Unit, Four Square (Scotland), Lead Scotland, the National Deaf Children’s Society, the Scottish Childminding Association and Stand Alone.

The Board was grateful for the detailed and careful submissions from these groups. In arriving at our recommendations we have listened to these special interest groups, a number of whom advocated a smoother interaction between student financial support and benefits in particular.

Independent students

Independent students* include those who are:

  • aged 25 or over; or
  • student parents of any age; or
  • students of any age, who have supported themselves from earnings for any three years before the start of their course.

Estranged students

Estranged students are distinct from independent students. They have been permanently estranged from their parents and do not have parental support. Also they do not benefit from having the Scottish Government as corporate parents, as is the case for Care Experienced students.

The Board considers it important that both independent and estranged students are treated in a similar way to other groups of students. This is in line with the principles of parity outlined in this report and it is important to apply this in both further and higher education.

*For a full definition of independent students, see Higher Education Student Support in Scotland 2016-17, SAAS.

“A wide discretion should be afforded to named support officers in institutions to tailor support for each disadvantaged student so difficulties that present a risk to the student succeeding (or dropping out) can be accommodated, even if not wholly academically related.”
Four Square

Care Experienced students

During this Review we heard compelling evidence from Care Experienced Students. They are a group of people, under 26 years old, who have all experienced major difficulties in their lives and are acutely vulnerable.

Following careful consideration of the responses to consultation from The Centre for Excellence for Looked After Children in Scotland, amongst others, we recommend that, in line with existing Scottish Government policy, Care Experienced students under the age of 26 should receive the Minimum Student Income of £8,100 as a bursary in both further and higher education. In reaching this conclusion we are mindful of the legal responsibility of the Scottish Government and other public bodies to act as corporate parents to such students.

We also heard evidence that the summer periods can be especially challenging for this group. We therefore recommend that the existing Care Experienced accommodation grant is retained.

“Only 7% of care experienced children go to university.”
Care Experienced Student

”I cannot stress how important summer support is. With no funding from family to call on, I have struggled significantly since starting university. I have been homeless as a direct result of the funding gap.”
Care Experienced Student

Non-core support

Parity in non-core and discretionary funding

Non-core support is additional funding targeted at students with additional needs. Discretionary support is funding available in exceptional circumstances, including hardship.

As part of the move to the Minimum Student Income, the Board debated whether discretionary funding should be reduced or removed. The Minimum Student Income puts more money in the pockets of the general student population, and so could reduce demand on discretionary funding.

As context, the latest available cost of non-core discretionary support is £80m across further and higher education. This is broken down as follows:

(£m) Further Education Higher Education Total
Non-core support:
Disabled Student Allowance £0.0 £7.7 £7.7
Additional Support Needs £3.4 £0.0 £3.4
EMA (2014-2015) £7.9 £0.0 £7.9
Adult Dependant £0.0 £0.6 £0.6
Lone Parent Grant £0.0 £3.0 £3.0
Vacation Grant for care leavers £0.0 £0.0 £0.0
Childcare £11.7 £4.2 £15.9
Sub-total £23.0 £15.5 £38.5
Discretionary support:
Travel Costs £15.8 £0.0 £15.8
Study Costs £6.8 £0.0 £6.8
Discretionary £6.9 £7.2 £14.1
Ad-hoc Payments £0.0 £5.1 £5.1
Sub-total £29.5 £12.3 £41.8
Total £52.5 £27.8 £80.3

Students with additional support needs


In higher education students can claim an income-assessed grant for their husband, wife, civil partner, partner or other adult dependents they act as a carer for. Students cannot claim this grant for another student. The dependent person’s income is means-tested as part of the assessment.

Lone parents

In higher education, students can claim a means-tested grant if they are single, widowed, divorced, separated or their civil partnership has dissolved and they are bringing up children on their own.

Disabled students

In higher education, students can claim for certain extra expenses that arise because they are studying if they have a disability or learning difficultly. This is not currently means-tested.

The Board concluded that non-core and discretionary funding should remain a vital means of additional support for Care Experienced students, carers, students from protected groups, refugees and asylum seekers, independent students with no family support and those from lower income households or disadvantaged backgrounds. We recognise that the value of non-core and discretionary funding is particularly important for some of the inclusion groups who responded to our public consultation, including CELCIS, Stand Alone and the Scottish Childminding Association.

We believe that non-core and discretionary funds provide responsive financial support for life events. However, to support the New Social Contract, such funds will require management from a central source of funding to make the availability of these funds more consistent. And they should be distributed under national guidelines but administered locally. This is an effective way to target discretionary funds to those in most need.

Further detailed work is required to determine whether the non-core funds in higher education can be made into national entitlements and extended into further education.

“At college you have to have a 95% attendance rate to receive your funding. If you drop below that they take a whole month’s funding.”
Student, Forth Valley College, Stirling

“85% said there should be a minimum income guarantee across all students.”

In summary, to achieve parity for young college students, part-time students and disadvantaged groups we recommend:

  • The Scottish Government should do further work to implement the principles of the New Social Contract for part-time students and to review the use of EMA in further education
  • The full Minimum Student Income of £8,100 should be paid in bursary for care experienced students – following the current approach of the Scottish Government
  • Non-core and discretionary funds should be managed from a central source, these should be distributed under national guidelines but administered locally

Clarity of funding


  • Information that is clear, consistent and concise
  • A single, centralised online portal
  • Comprehensive advice and guidance for students and practitioners
  • Face-to-face local support in colleges and universities


We found there was a lack of understanding of the financial support available for students. The Board agreed that resolving the issues around clarity of advice and guidance would have a significant impact for students across Scotland. For this reason information, advice and guidance was a specific area of focus for the Board.

In higher education, SAAS serves as the primary source of information and guidance for students and their families. Information is available through a range of channels and has evolved over recent years to include YouTube guides and social media streams. SAAS also undertakes around 300 visits per year to schools, colleges and universities and attends other open events. Whilst there can always be improvements around the margins, the information is generally provided by SAAS in a clear and consistent manner.

The situation is different in further education. This is because student funding has evolved on a discretionary basis, rather than as an entitlement. Decisions are made at a local level and depend on the funding available to each college, as we have outlined previously. There is no consistent application of national guidelines for students or a central source of information. This means students are reliant on the information provided by the individual colleges.

Research findings

Our YouGov research highlighted the need for well sign-posted, clear and reliable information.

During our consultation we asked ‘what type of information on funding would be helpful to students’. 78% of respondents commented. The need to have clear, simple and concise information was a common theme. Respondents suggested that information should be available from one location, and suitable for parents, students and other relevant parties. The availability of an online calculator to help students work out their funding entitlement was also a common suggestion.

Specific enhancements identified by respondents included:

  • more information on interest rates and repayment terms;
  • information on how student support interacts with benefits;
  • signposting to relevant support agencies;
  • case studies showing how the rules apply in various circumstances;
  • information on the full range of available support and how to access this, including timelines;
  • clear information on the documentation required;
  • debt advice; and
  • information on emergency funding.

“Half of students are unaware of services in college or university which could help with money management of budgeting.”

“We need a ‘one stop shop’ advice service for Scotland which is easy for all students to access.”

In addition, some respondents noted the need for tailored advice, particularly for those students with specific needs and also to take into account any local college variations.

Finally, the need for face-to-face advice, as well as advice available via a number of channels, was a consistent theme during our Review.

Being clear about student loans

During our evidence gathering, and in particular our focus groups with students, it was clear that the understanding of student loans was mixed – particularly with regard to interest rates and repayment terms.

Sometimes there was confusion between the terms of Scottish student loans and the terms of loans from other parts of the United Kingdom. As we outlined previously, Scottish student loans have lower rates of interest compared with loans available to students in England and Wales, and this was not often understood.

During the public consultation we asked ‘what could be done to help students understand more about student loans?’. 72% of respondents made suggestions and the main theme was the need for clear, concise, accurate and jargon-free information about student loans. Many respondents wanted information provided on student loans to include examples of repayment levels in chart or table form.

“13% of respondents didn’t claim financial support because they were not aware that any support was available.”

“The rate of interest on student loans is lower than most other loans, and student loans don’t affect individual credit rating in the same way as other loans, such as mortgages or a bank loan. But there are many students and their families who may not fully understand this relationship.”
Consultation Response

Role of parents/carers

We found that parents and carers often play a significant role in decisions that students make on financial support. It is vital that parents and careers have access to robust, user-friendly information too.

Role of schools

Students told us about the key role that schools have to play in helping students move into further and higher education. There was number of comments during our evidence gathering on the need for education on student finances to begin in school.

“One of the biggest problems on student loans was not that I didn’t understand, it was that my parents didn’t.”

“There should be effort made to help people distinguish between the idea of ‘good’ debt accrued through educational loans at acceptable rates of repayment, compared to ‘bad’ debt which includes payday loans, store cards etc.”
Consultation Response

When asked what more could be done to help parents and carers to understand the student support funding available, respondents to our consultation suggested that information could be provided through schools, including at parent evenings, via parent teacher groups, or at school information sessions.

We also heard evidence that information on the current system of financial support is not as well linked as it could be to the Scottish Government’s ‘Learner Journey’ initiative. SAAS is reliant on being invited into schools to be able to present to parents and prospective students. Information on higher education funding is often shared after students have made their UCAS selections. Better alignment between student financial support information and the secondary school education process would help to encourage prospective students into further and higher education.


Based on the consultation responses gathered, the Board believes the information which students can access should be clear and consistent – and the simplicity of the New Social Contract lays the foundations for that. Students should be able to calculate what financial support is available to them, and be directed to a relevant source in the event that more information is required. It should all be accessible via one portal which is frequently maintained and supported by well-trained, local support in colleges and universities – especially for those students with additional support needs.

“78% of respondents said information should be provided at the pre application stage.”

“The biggest problem was trying to communicate to my parents how student loans work.”
Student University of St Andrews

In summary, to improve the clarity of funding, information and guidance we recommend:

  • A single, centralised online portal which provides information to all students on all elements of student support – which could be hosted by Scottish Government. The portal should provide:
    • Comprehensive and consistent advice, with advanced pathways for distinct groups of students that may require further support;
    • Detailed information and guidance on student loan repayment terms, including simple guidance on amounts to be re-paid;
    • A budgeting calculator; and
    • Up to date information which is refreshed regularly – to ensure there is no confusion with student funding available elsewhere in the United Kingdom.
  • Consistent guidance and communications should be used throughout Scotland:
    • for schools and prospective students of any age, with consideration given to an appropriate benchmark for advice to aid consistency;
    • for parents/carers, closely linked to the offering from schools; and
    • for students, to help teach them how to manage their money, including ways to reduce expenditure or boost income.
  • Student facing support should be retained locally at colleges and universities in order to support students to access the system, especially those with more specialist needs


  • Additional funding for students
  • Increased bursaries
  • Student loans available for further education
  • Debt write-off for further education students progressing into higher education


The New Social Contract proposes that a Minimum Student Income of £8,100 is available to students while they study. The Review explored and costed a broad range of options to fund this.

Importantly, in considering these options, the Board did not want to erode the current levels of bursary available to any student. And in its costings, the Board assumed that the current means-testing of bursaries would continue to apply.

We used publicly available data and Scottish Government officials, checked the calculations prepared for the Board and confirmed that the assumptions appeared reasonable. The lack of available data for students in further education meant that some assumptions had to be made – something which our recommendation on a common funding system is intended to address.

The Board acknowledged the remit of this Review, that any recommendations should be made in full awareness “of the evident constraint on the public finances”. We acknowledge that there are probable constraints on the direct cash budget that supports bursaries. However, we understand that the Scottish Government has headroom to consider increasing the use of student loans within existing allocations from the United Kingdom Government.

Current core funding for students

The data for the academic year 2015-16 showed that the cost of bursary support was £126m, split equally between further and higher education. The cost of student loans in higher education for the same period was also £126m (sometimes referred to as the Resourcing and Accounting Budget ‘ RAB charge’). This is based on total lending of £486m.

Bursary and loan costs are accounted for in different ways by the Scottish Government. They are treated as separate costs which are not interchangeable. It is not possible to subsidise one from the other.

“The interest rate [on student loans] should be low and the financial implication for the person’s future should be explained before they are allowed to take the loan.”

Technical Accounting Notes:

The Annually Managed Expenditure ( AME) charge is the present value of total new loans issued plus capitalised interest less the cost of loan repayments to give the cost of providing the loans in a particular year.

Under the current student support package total loans given out by SAAS account for £486m, this is from the capital AME budget. The current RAB charge of 26% means that £126m of this is written off, the government expects to only get £0.74 back for every £1 borrowed, and is part of the ringfenced DEL budget. The current bursary offer costs £126m and is included in the RDEL budget.

Costs to implement

Bursary only approach

The Board considered the cost of increasing bursaries to achieve the full £8,100 per academic year for students in both further and higher education, with no student loan contribution. The cost of this was £459m per year more than the current bursary spend. Whilst this could be supported by some members of the Board, the general consensus was that this outcome could not be pursued given the remit of the Review.

The Board identified three options with associated costs. In each option, the additional cost of student loans is described as notional as there is no immediate direct cash cost, but rather future write-downs to student loans.

Option 1 Status quo for bursaries

Consistent with the remit of the Review that the Board should be “aware of the evident constraint on the public finances” we considered a cost neutral approach. To achieve the £8,100 funding without increasing the direct bursary cost and using the existing resource streams available to the Scottish Government, additional student loans could be made available to top-up existing bursaries. This balance of loans and bursaries is shown below:


This option would not increase direct bursary spend, but would notionally cost £252m per year more for additional student loans.

Option 2 Hybrid approach

The Board considered a number of ways in which a journey to a balanced 50/50 bursary to loan approach could be managed. In the hybrid approach shown below, bursaries for higher education would remain the same and means-tested bursaries for those from the poorest backgrounds would be increased to £4,050 for further education students. This option does not create immediate parity in bursaries but it does help to manage the introduction of student loans into further education. This balance of loans and bursaries is shown below:


This option would increase the direct bursary cost for further education students by £16m per year. In addition, it would increase the notional cost of student loans by £231m per year.

Option 3 50/50 bursary to loan balance

To achieve parity across further and higher education bursaries, the Board considered the cost of providing all further and higher education students with £8,100 a year in minimum income, split 50% through bursaries and 50% through loans for those from the poorest backgrounds. This is shown below:


This option would cost the Scottish Government and additional £123m per year in direct bursary cost and would increase the notional cost of student loans by £153m per year. This option was the preference of NUS Scotland and Unison.

In summary, to fund the introduction of the Minimum Student Income for both further and higher education students we recommend:

  • The Scottish Government should adopt Option 2 which provides:
    • an immediate and meaningful improvement in funding to students across further and higher education
    • equal split of bursaries and loans for the poorest students in further education to support the introduction of student loans


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