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The cost of student loans and grants is more than £1 billion per year
The Welsh Government claims its financial support package is the most generous in the UK and it aims to help people from all backgrounds enter university
Eligible students can access a mix of loan and grant support to cover university living costs and tuition fees. The living cost support available to a student partly depends on their household income.
Loan repayments begin once former students earn above a certain threshold and are based on how much students earn rather than how much they owe. Former students make repayments until the debt (plus the interest) is paid off in full, or until the debt is written off after 30 years. The average debt for former students with a loan balance at the end of 2020-21 was £27,600.
Our report shows the cost of student loans and grants in Wales has increased by 35% since 2015-16, reaching almost £1.1 billion in 2019-20. The total value of loans owed to the Welsh Government has also steadily increased to £5.3 billion in 2019-20.
The Welsh Government will not get back everything it is owed in loans. Changes to the support package have resulted in more students taking out larger loans that are less likely to be repaid in full. At the end of 2019-20, the Welsh Government estimated that for every £1 outstanding in student loans, it would recover 65p.
The Welsh Government has been paying the Student Loans Company (SLC) a little over £20 million per year to administer student finances in Wales and is doing a good job in its day-to-day management of student finances. It has good relationships with SLC and other UK governments, who together agree priorities for SLC and review its overall performance. But the Welsh Government team that manages these relationships is small and we recommend action to reduce risks associated with the reliance on such a small number of staff.
We also highlight some limitations in the way that the Welsh Government scrutinises SLC, given the large sums of money involved. While the Welsh Government has improved its use of Wales-specific data on SLC performance, we recommend further improvements to performance monitoring, with the Welsh Government needing to report data upwards through its governance structure to consider whether SLC is achieving value for money. And there is scope to involve students more meaningfully in planning and monitoring the administration of student finances.
We are publishing this report when many of our young people will be preparing to enter higher education for the first time. Ensuring that students understand and can easily access the financial support on offer is vital. The overall sums involved and the need to forecast loan repayments mean that student finances are an important feature in the Welsh Government's annual accounts. Our findings about the way the Welsh Government is managing student finances are therefore good to see. But given the sums involved, it should strengthen its scrutiny of the performance of SLC and the overall value for money of the services it provides, ensuring that the needs and experiences of Welsh students are at the heart of its decision-making.