UK Universities Call For Shift In Current Student Loan Company To Resolve Financial Challenges

Professor John Latham CBE, Vice-Chancellor of Coventry University, along with VCs of other universities has called for a shift in the current model of Student Loan Company.

Study in UK: Professor John Latham CBE, Vice-Chancellor of Coventry University and Group CEO has commented on the current status of cash-strapped UK universities. He talked about how the UK government can change the Student Loan Company (SLC) payments to support universities facing financial problems.

The current Student Loan Company are based on a traditional three-term/semester model which is structured with a ratio of 25:25:50. This model assumes that the initial two semesters are focused on teaching and operations and the last one is about assessment. One of the various reasons behind these financial issues faced by the UK universities is that the current profile of payments is through SLC only and for many institutes, student loans are the single biggest source of income.

"On paper, this model makes sense – the theory says that SLC payments to universities are staggered throughout the year to ensure effective coverage of outgoing costs. With the first two semesters being more compact, less money is received, before a bulk payment is made in Semester 3 to cover costs for the rest of the year. However, there is a problem. The first two semesters – those focused on teaching and operations – are significantly more cost intensive and it is months after the work has been done that payment is made, leaving universities constantly in arrears. It should be noted that the costs of permanent staff and running campuses are incurred evenly across the year and do not fit the current SLC payment profile," said the Vice-Chancellor.

Either students are paying through SLC or through the Apprenticeship Levy which are paid evenly in instalments across the year.

He also said that the government's immigration and visa policies have resulted in less international students enrolling which further resulted in more financial challenges for the universities.

UK Universities Urge 25:25:50 SLC Model To Be 33:33:33, progressing to 40:40:20

"That is why I, alongside other Vice-Chancellors, am calling for a shift in the current model, acknowledging that many universities would now greatly benefit from SLC financing spread across the year rather than the rigid three-semester system currently used. This starts with the implementation of a new funding profile of 33:33:33, progressing to 40:40:20. This shift in approach will not increase overall costs and will only affect the budget for one year. After that, there would be no additional cost impact and no additional cost to the taxpayer," he said.

" Even with the move being phased, first to 33:33:33 and then to 40:40:20, it would have an immediate impact on the current situation - one which has largely been created by government rhetoric and policy," he added.

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