What is the RAB at alternative providers?

The department for Business, Innovation and Skills has released a statement in relation to the Guardian story on public funding of students at private providers, or ‘APs’ – ‘alternative providers’.

As the higher education sector has diversified, the number of applications for student support at APs has increased. In addition, the tuition fee changes implemented in 2012/13 mean students at APs may borrow up to £6,000 a year to cover the costs of their tuition. The number of English and EU students claiming support at APs has grown from 13,000 in 2011/12 to 30,000 in 2012/13, and the total public expenditure on these students has risen from £60m to £175m. This is 4% of the total student support budget. Growth has been particularly concentrated among students studying for Higher National Certificates (HNCs) and the Higher National Diplomas (HNDs).

Note that public expenditure differs from ‘outlay’. The latter would be maintenance grants plus loans for tuition fees and loans for maintenance. Expenditure is instead: grants plus the estimated non-repayment on loans issued.

That is significant as it may mean the outlay on loans and grants to those 30 000 students is over £300m in total. We should have full figures on 28 November.

What is interesting though is that figure of £60m expenditure in 2011/12. That suggests that the government is expecting less money back from graduates of private providers than from established universities.

In 2011/12, the breakdown of total private student support was:

• £30.8m in tuition fee loans
• £48.9m in maintenance loans
• £22.6m in maintenance grants

That £60m figure equals £22.6m (grants) plus the estimated non-repayment on the £79m of loans.

A quick and dirty calculation suggests £37.4m of ‘RAB’ expenditure ( £60m minus £22.6m) and therefore a non-repayment of 47%!

That is,  the government only expects to receive 53p in the pound for loans made to those students. Can this be true?

That would equate to more per student public subsidy to commercial operations since the  official estimate for loans to students of established universities is that 65p in the pound will be repaid.

Update – 21 November 2013

My quick and dirty calculation above turns out to be incorrect, because I was relying on the data provided to me by the Student Loans Company in November last year. It turns out the figures for student support at private providers for 2011/12 were amended in September this year.

In 2010/11, they now think £30m of grants were made, not £22.8m, and £90m of loans, not £80m. So they have a ‘RAB’ of circa £30m (33.3%).

That amendment might give you a flavour of what the National Audit Office report into the SLC will reveal next week.

Incidentally, that total outlay for 2012/13 looks like being over £300m. But we’ll probably still be revisiting that in 2014.