Title of the slideSecond line of the slide
LASER Learning Awards
SeminarFunding Changes and their implications for Sept 2013
Joy Mercer, Director of PolicyAssociation of Colleges
11 February 2013
Title of the slideSecond line of the slideWhat this presentation covers
16-18/19+ education funding trends
24 + Adult Learner loans
Challenges
Title of the slideSecond line of the slideWhere the education money is
FE Colleges 16-18
£2.7 billion
Sixth Form College
£0.75 billion
College 16-18 Apps
£0.3 billion
Schools3-16
£46 billion
School Sixth Forms
£2.1 billion
16-18Apprentices
£0.5 billion
Colleges 19+FE
£1.8 billion
College Fees etc£0.8 billion
£
19+ Skills£1.2 billion
College HE£0.5 billion
University Teaching
Grant£3.8 billion
HE Fee Loans
£3.6 billion High cost pupils
£0.6 billion
FE Loans
Title of the slideSecond line of the slidePost-16 education budgets
HM Treasury controls mean annual dep’tl budgets.
Higher education grant-loan transfer
16-18 education budgetstatic/declining since 2010. Lack of clarity about future
SFA funding partly protected in 2010 spending review. Significant risk post-2015.
Source: BIS/DFE statements plus OBR projection on loans
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
0
2
4
6
8
10
12
14
16
Student LoansHEFCE T&L16-18SFA
Title of the slideSecond line of the slide16-18 education budget
Note on 2012-13 allocationsYr 1 numbers drive Yr 2 budget
2012-13 allocations vs 2011-12FE -3.2%, SFCs -2.2%, SSFs -2.6%
Source: EFA funding team
DFE has ensured 5-16 Schools budget rises with inflation.
Series of cuts made in 16-18 education in 2010 (EMAs, grants to Councils, Entitlement down to 30)
16-18 numbers down in 2011-12 and possibly in 2012-13
16-18 funding-£4,543 in 2012-13 Funding per secondary pupils aged 11 to 16 at £5,576 - a 22% premium.HE -£8,000 Is £3,900 enough for a core full-time programme?
Title of the slideSecond line of the slide
What government wants from 16-18education?
• a drive to improve standards in both academic and vocational courses. The Ofsted Chief Inspector's latest Annual report declares that 35% of institutions need improvement. Alison Wolf's review of vocational education prescribed a series of reforms to improve quality.
• measures to ensure that every young person acquires a basic level of Maths and English by the age of 18 if they did not so by 16.
• ensuring more young people from poorer families enter selective institutions.
• reducing the number of young people becoming unemployed and increasing the number of apprentices.
Title of the slideSecond line of the slide19+ FE/Skills funding
Academic year figures
2010-11 Allocated
2011-12 Allocated
2012-13 Allocated
2013-14 Budget
2014-15 Forecast
ASB 2,539 2,592 2,602 2,160 1,974
Performance 97% 96%
Total SFA 3,881 3,809 3,961 3,660 3,638
SFA’s Spending Review cuts backloaded (until Loans start)
+Two year’s of underperformance
=A really tough allocation round in 2013-14 and no tolerance on 2012-13
New SFA formulacreates new issues
Adult Skills Budget (ASB) top-sliced to support Employer Ownership plus pressure to fund City Deals/Community Budgets
Source: AoC analysis of allocations plus estimates
Title of the slideSecond line of the slideManaging 2013
New 16-18 Funding Formula EFA Funding Update (Dec 2012) Student Number Statements (Jan 2013) Queries to EFA or to Councils (Feb 2013) Final 16-18 allocations (Mar 2013)
New SFA Funding Formula Provisional SFA Allocations (Dec 2012) SFA Funding Rates and Rules (Jan 2013) Final SFA allocations (Mar 2013)
14-16sHigh need pupils
24+LoansEmployer ownership
European Social FundHE Student Number Controls
City Deals & Community Budgets
Community Learning Trusts
Prioritise!
Title of the slideSecond line of the slide24+ Advanced Learner Loans
A ground breaking reform
Full-cost fees for 24+L3+
Student Loan Company pays the feesHMRC collects them
A different student relationship
Title of the slideSecond line of the slideLoans in FE – why?
FinancialCuts current expenditure because loans are capitalisedGrant to SFA cut by £400 mil in 2014-15 BIS takes an impairment charge (estimated at 60%)
Other reasons for FE LoansNo upfront payment (except for 24+ apprentice loans)Possible to extend existing HE model9% repayment over £21,000 incomeInterest rate varies with income tax band after 2016
.
.
Title of the slideSecond line of the slideLoan implementation
TimetablePlan to introduce FE Loans announced 2 years agoStudents able to apply for loans in 49 days time (1st
April)Student Loan Company starts paying loans in August
2013
Protecting the consumerIt is likely that students will find it easy to get a loan,the bigger question will be whether they want one
.
.
Title of the slideSecond line of the slide24+ Advanced Learner Loans
EligiblityAged over 24, UK/EU resident, England-based study SFA-approved provider QCF Level 3+4, Access to HE, A-levels, Adv/Higher
AppsAnyone allowed four loans (L3, L4, Cert, Dipl)
ProcessLoans – min (£300) , max (SFA rate), apps (50%) Online application to SLC from April 2013College confirms enrolment/attendance/course detailsMonthly payment, apportioned over course lengthPayments stop if student withdraws
.
Title of the slideSecond line of the slideThe HE vs FE loans system
HE Loans 24+ ALLs
Fees Regulated Unregulated
Loan amount Cover 100% of Fee Only up to Maximum set by SFA matrix
Course Degree-level but set by institution
Approved L3 or L4 qual on SFA database
Application Direct to SLCwith UCAS help
.Direct to SLC
Loan distribution
Headcountcontrol
Cash quota(fee/ student trade-off)
Title of the slideSecond line of the slideThe challenge for Colleges
Loans in FE are massive challenge for Colleges
Sums of money relatively small in 2013-14
Financially, the future for 19+ may be fees and loans
Three big issues- planning & pricing- advising- processing
Title of the slideSecond line of the slidePlanning & pricing
DemandLittle useful pricing dataLow public awarenessMany 24+students & apprentices pay nothing at momentFall in mature and part-time HE students in 2012Some positives – remove up-front fees, no “firstness” rulesOpportunity to expand if you can find the studentsRelationship between demand and price
Title of the slideSecond line of the slide24+ Adv Loans allocations
2013-14 FY£129 mil
2014-15 FY£398 mil
Student numbers324,000 over 24s on SFA L3,L4of whom 41,000 pay no fees
91,000 apprentices
SLC planning assumption80,000 in 2013, 150,000 in 2014
Colleges & SFA funded providers800 have relevant students
2013-14 AY equivc£220 mil
Title of the slideSecond line of the slideThe public 24+ L3+ market
250 Colleges, 30 Univs & HEIs, 500 training organisations
Average loan allocation£275,000 in 2013-14 academic year£500,000 when 24+L3+ loans fully operational
Average student numbers100 Yr 1 students, 190 full year
Fees averaging £2,500 to £3,000 for the full course
Title of the slideSecond line of the slideMaximum loan values?
A (1) B (+12%)
C(+30%)
D(+60%)
E(+72%)
Certificate(13-24)
£724 £811 £941 £1,159 £1,246
Certificate(25-36)
£1,265 £1,417 £1,645 £2,025 £2,176
Diploma(37-48)
£1,987 £2,225 £2,583 £3,179 £3,417
Diploma(49-72)
£2,573 £2,882 £3,345 £4,117 £4,425
Diploma(73-132)
£4,170 £4,670 £5,421 £6,671 £7,172
Diploma(132+)
£6,602 £7,395 £8,583 £10,564
£11,356
Version 2 of the SFA Loan rates matrix, June 2012
Title of the slideSecond line of the slidePricing
Pricing technicalitiesSLC links loan to an approved learning aimSFA confirm prices/issue LARA January 2013SFA rate is a maximum not a price list
Pricing and studentsSome students will be inquisitive about what fees buyColleges have found fees a challenge in the 2000sFocus on maximising Fees * Group size * Retention
Title of the slideSecond line of the slideProcessing
Registration of the loan with Student Loan CompanyExpect Colleges to make a course offerStudent applies (with Passport No, LARA, Dates, Loan £)College confirms enrolment after 2 weeks (provides ULN)
Attendance and withdrawalTermly confirmation of attendanceChanges of circumstances procedureWithdrawal triggers end of loanCompelling personal reasons procedure
Title of the slideSecond line of the slideIs it worth bothering?
Cons“Students/Employers don’t want them so we’ll lose money”“It’s better not to offer loans than to mess up”“It’s always possible they’ll be canned in 2013 or 2015”
Pros“Loans will help students change careers or make
progress”“If demand drops elsewhere, there’s room to expand”“Many HE students in Colleges start on Level 3 courses”“Government may extend loans to more students in
future”
Title of the slideSecond line of the slideImplications 16-18
• Fewer qualifications per student• Stepping stone qualifications towards GCSE maths
and English• Skills for employability• General qualifications are getting harder-no
modules, limited resits; end exam assessment• Competition within the AO market for general
qualifications
Title of the slideSecond line of the slideImplications for 19 plus
• Access to HE-reprieve from loans but have to progress to HE; possibly other ‘vulnerable’ groups funded through decline in HE enrolments
• Loans could be a commercial opportunity to develop programmes for career changers
• Marketing of loans and qualifications that can deliver quickly and cheaply
• On line learning and open source learning• Development of higher apprenticeships and non
prescribed HE-involvement of employers• Initial Teacher training L3/4/5
