1. SQW was appointed by the Scottish Government to conduct research into the financial behaviour of Further Education (FE) students in Scotland and to explore the demand for and potential impact of student loans amongst this group. The study was carried out between October and December 2018.
2. In 2016, the Scottish Government commissioned an independent review of Further Education (FE) and Higher Education (HE) student support. The purpose of the review was to assess the effectiveness of the support available and to make recommendations for beneficial change, with a focus on ensuring that the FE / HE system in Scotland was equitable, fair and supported all students throughout their learner journey. In November 2017 recommendations were published from the review which included that:
- Student loans to be made available in further education (with FE loans written off for students transferring into HE)
3. This study was commissioned to contribute to the evidence base and to inform the Scottish Government's response to the recommendation on student loans. This research forms one part of a widerprogramme of work to address the review's recommendations.
4. The main stages involved in the research were:
- Project set up and design – an inception meeting with the Scottish Government and a desk review of background policy and research were used to inform the research design, including the survey tools and workshop outline
- Data Collection – a series of 18 focus groups with 169 college students in Scotland and an online survey was conducted over October and November 2018 receiving over 2,300 responses
- Analysis and Reporting – a validation meeting was held by the research team, bringing together the key findings from each of the strands of the research to identify the headline messages, which are then captured in this report.
Feedback on student loans
5. There was a high level of general awareness about student loans among the FE student population. However, there was much less knowledge about the details of the model and there were some examples of misinformation from friends and family.
6. Two thirds of all students said they would be 'likely' or 'very likely' to apply for a student loan if they were eligible. Over a quarter of all students reported that they were unsure about applying for a student loan and would require further information before deciding.
7. Interest in access to a loan was highest amongst students who were parents and carers and had additional financial challenges.
8. Those students least likely to apply for a student loan included care-experienced students (who tended to be more debt averse) and students living in more affluent areas (who tended not to need additional finance).
Current sources of financial support
9. Most students were in receipt of a bursary as well as other additional sources of income. The most common additional sources of income used by students were support from friends/family, employment, savings and welfare benefits.
10. Students found the college bursary system and application processes challenging. The timeframes and evidence requirements were difficult for students to meet and most felt unclear about their eligibility for financial support.
11. Debt levels amongst the FE student population could be considered broadly in line with the average unsecured personal debt for the adult population as a whole. Most students owed less than £5k and this debt had almost always been used to cover essential living costs such as rent, bills, food and transport. The exception to this was usually students who were lone parents as they tended to be twice as likely to be in debt than the average student.
12. Support from family and friends were the main sources of debt support for FE students, with a smaller number of students using commercial credit. Only a small minority of students reported using payday loans.
Financial profile of FE students
13. A lot of FE students experienced a shortfall between their income and expenditure, and reported not being able to meet their essential living costs.
14. Most of the students who participated in the research were worried about their financial situation, with one in five very worried about their finances. In particular, mature students in their 30s and 40s and especially those who were parents were the most worried about their finances while studying.
15. Most FE students are highly dependent on their families for financial support. Those students unable to rely on family or friends, such as care-experienced students or those in the most deprived areas, are more likely to use commercial credit or payday loans.