14 th December 2012 Birkbeck University Maggie Roy – Skills Funding Agency

1. 14th December 2012 Birkbeck University Maggie Roy – Skills Funding Agency

2. Little public awareness Ground breaking reform being introduced No Grant funding for 24+ doing L3+ from 1st August 2013 Applications for Loans open 1st April 2013 Anyone starting before 1st August, continue to be funded to complete

3. Policy Rationale • Comprehensive Spending Review – greater pressure on resource • Focus available funding on young people, those without basic skills, those seeking work • Maintain access to learning for those outside these groups by providing finance. This enables learners to continue to participate by putting the purchasing power in their hands, but at the same time removing the upfront costs

4. Key Facts • Loans available for learners: • aged 24 and above at the start of the course • studying at advanced or higher levels • Loans are not means-tested and not subject to credit checks • The Student Loans Company will lend the requested amount and pay the university/college directly in monthly instalments not via the learner. • Individuals who progress from an Access to HE Diploma course to complete an HE programme can have their outstanding 24+ Advanced Learning Loan for the Access course written off. (Ministerial statement 12th July 2012) • Loans are NOT compulsory, Students can also*: • Pay full fees upfront to the university/college, or • Pay part of the fees and take tuition fee loan for the rest

5. Learner Eligibility To be eligible for a Loan the learner must: • Be aged 24 years and above on the first day of their learning aim • Satisfy the nationality and residency criteria in line with the regulations • Be studying:- • Agency-approved learning aims in England • At an Agency-approved provider in England in receipt of Adult Skills Budget funding • Previous educational study will not affect a learner’s entitlement to their first Loan. For example graduates will be entitled to a Loan for an Apprenticeship. • The SLC will be responsible for determining a learner’s eligibility for a Loan and for making Loans payments on behalf of learners to providers 5

6. Qualifications • Loans may be used to fund the following types of further education provision regardless of the mode of study: • A Levels (including A2s and AS levels) – up to 4 at 1 time • QAA Access to HE Diploma • QCF Level 3 Certificate • QCF Level 3 Diploma • QCF Level 4 Certificate • QCF Level 4 Diploma • Advanced Apprenticeships • Higher Apprenticeships • 1 loan of each type/level, MAX 4 loans 6

7. Number of Loans • An individual can only access one 24+ Advanced Learning Loan at a time and may only take out one Loan for each qualification type. • A single Loan application may include a programme of up to 4 A-Levels or AS/A2s. • One Loan application is required for the components of an Apprenticeship Framework. • Individuals can have up to a maximum of four Loans, this may be extended should there be compelling personal reasons (see cases for 5th Application – e.g. Stephanie following)

8. Number of Loans - Examples                    

9. Brian – 5th application      • Having successfully accessed four loans Brian applies for a fifth to complete a programme of A-levels. • Brian has accessed his maximum entitlement of four loans and the application is therefore declined.

10. Sam – 5th application   • Sam is made redundant before the completion of his Higher Apprenticeship in Plumbing and cannot find a job to complete his framework. • The loan is suspended for 12 months and payments to the provider stopped. • After 12months Sam has not found suitable employment, the learning is assumed to be terminated and the loan moves into repayment. • Sam is liable for the loan payments made to date. • 18 months later Sam gains employment with another organisation who will support the completion of his Higher Apprenticeship. • Under compelling personal reasons and subject to suitable evidence the SLC will approve another Loan for the continuation of the same framework.

11. Stephanie – 5th application After 8 weeks of starting the Access to HE Diploma Stephanie decides she has made a mistake and chosen the wrong course. Stephanie chooses to withdraw from the learning and the Loan payments to the provider are stopped. Stephanie is liable for the Loan payments made to date. In discussion with the college Stephanie identifies a programme of A-Levels would be more suitable for her needs. Stephanie is able to use a fifth and final loan to support her completion of a programme of A-levels.     

12. Loan Amounts • The minimum Loan a learner can apply for is £300 • The maximum Loan value a learner can apply for is the funding rate published on LARA • For Apprenticeships the maximum Loan rate is 50% of the rate for the relevant framework pathway • It is the individual’s choice how much of the provider fee is funded via a Loan or other means. • 2 weeks ‘cooling off’ period • Where Higher Apprenticeships contain HEFCE funded qualifications, the learner will be able to apply for both an 24+ Advanced Learning Loan and a HE Loan 12

13. Fees • It is the provider’s decision as to what they charge for a particular learning aim however, it is not expected that the provider would need to charge more than the maximum amount. • SFA will confirm rates/issue in January 2013 • If the fee charged, as detailed on the application form, is lower than the Loan value requested, the Loan value agreed will be reduced to reflect the fee. • Providers will need to understand how the current VAT rules apply to them and whether they will need to charge VAT on their fees to learners.

14. Simplification – Rates matrix

15. Loans Bursary Fund The Minister confirmed in a statement on 12 July 2012: ‘A £50 million bursary fund over two years, disbursed by colleges and training organisations. This will help vulnerable [Loans] learners such as those with learning difficulties or disabilities, parents who need help with childcare, and ex-military personnel. The level of the bursary fund will be kept under review so we continue to provide the right level of support for those who need it’. A single flexible budget to provide of support for disadvantaged and vulnerable learners. Providers have discretion on how funding is allocated to their learners. The Bursary fund is intended to remove the barriers to Loans learners to encourage them to begin or continue on their course. However this fund cannot be used to pay fees

16. The HE vs FE Loan system

17. Key Facts – Repayment • Loan repayments mirror the Higher Education policy • Repayment will only start once the learner has finished their qualification and is earning more than £21,000 • Repayment of Loans is through the tax system; first repayments commence in April 2016 in line with changes to HE repayment • Mechanism for voluntary repayments payable to the SLC (from individuals and employers) this can happen at any stage • Repayments are at 9% of income above £21,000 – irrespective of the amount of Loan taken out • Interest rates are variable based on income up to maximum of RPI+3% for incomes above £41,000 • Outstanding Loan balances written off after 30 years 17

18. Repayment Example monthly repayment amounts, income each year before tax: • These repayments will be linked to earnings rather than Loan amount, so regardless of how much a learner owes, the payments will be the same. • If annual earnings fall below £21,000 repayments will stop and only re-start when earnings increase to more than £21,000. 18

19. Learning and Funding Information Letter • This document must be completed and issued to the learner, by the college or training organisation, along with the published material on Loans when the learner is considering applying for a Loan. • This gives the learner: • the information they need to consider their funding options. • the essential information they need to complete an application, should they decide to apply for a Loan. • It can also: • support the management of learner places, particularly when considering the availability of Loans facilities. • place some distance between the college or training organisation and the learner’s funding choice. • See draft letters on the Agency website here 19

20. Loans Materials – Available now

21. Thank you & Any Questions?