Attitudes to Further Education Loans BIS May 2012

Background Research sampled those aged 23+ likely to study at L3+ in FE to explore learner reaction Focus groups assessed reaction to loans and terms and conditions, and explored effective messaging Survey of 400 adults aged 23+ to estimate potential impact on participation Research carried out by TNS-BMRB

Initial reactions to FE loans To stimulate critical appraisal, groups were presented with FE loans ‘cold’ – focusing on withdrawal of subsidy and course costs to be funded by a loan This created worry about costs, debt, impact on poorer groups. Associated with bank loans and credit with heavy, inflexible, high rates of interest. Reaction was significantly changed when details of FE loans were explained, particularly government operated (not a bank), income contingency, low level of likely repayment, no credit check Most felt they would not be put off after understanding the full details, although those aged over 40 and seeking a route back in to the labour market were still negative

Survey of learners Learners asked to react to scenario of average fee cost of £3k to £4k and loan available to help if needed Around three quarters (74%) felt they at least might still do the course Some groups were more likely to say they would still do the course –Young people (23-29) –Asian and Black people –Those unemployed and seeking work –Those definitely planning to learn in next two to three years Those debt averse did not appear to be put off by loans The most important factor in the decision to learn was the perceived employment benefit The level of interest, how much you pay back each month and income contingency helped drive positive responses While overall reaction is positive, a large proportion said they “might” still do the course, underlining the importance of clear messaging

Exploring effective messaging The research tested “key propositions” and targeted messages to get the details across succinctly: –Positive reaction – the details in the messages were reassuring –Liked that it was Government and not a Bank; –Key messages on how loans will be suspended if income falls below £21k were very well received –Less interest in rationale for change – few aware of government subsidies –Not focused on overall course cost but needed to know level of repayment, interest rate, eligibility and what the loan covers –Working examples judged helpful to show how interest and repayments worked –Reacted negatively to sales speak or government jargon, particularly younger groups

Conclusions Loans do not appear a strong deterrent to participation even amongst certain groups provided terms explained Effective messaging key – many of the features designed to help with access and fairness are well received Initial “key propositions” were working well and will be further refined to make more effective