NASMA Letter sent to Huw Lewis, Minister for Education & Skills, Welsh Government, re: Financial Contingency Fund, 22nd August 2014

Posted: 26-08-2014

Dear Mr Lewis,

Re: SFWIN 01/2014 - Financial Contingency Fund (FCF)

The National Association of Student Money Advisers (NASMA) wishes to express its concern over the content of the recently published Student Finance Wales Information Notice (SFWIN) 01/2014, which announces the decision not to create a FCF HE Scheme for AY 2014/15.

The FCF has been an immensely effective tool in aiding the retention of students in the most vulnerable circumstances, as well as compensating for imperfections within the student finance system (which, more often than not, have the most severe impact on the same vulnerable groups):

  1. Students with dependants

The current grants for dependants package was launched following the introduction of the tax credits system in 2003, in order to develop a complementary package of financial support. With the imminent introduction of Universal Credit, which will by its nature abolish tax credits, students with children are set to lose a substantial amount of financial support.

Grants for Dependants are the most complex area of the student financial support package, and take longest to process as a result. This year saw many instances of students not receiving their full entitlement until well into the autumn term with most resources aimed at core processing of maintenance loans and grants (available to all students). Students in this group invariably face the longest delays to their funding being processed, and are therefore placed in precarious situations each year of their studies.

The FCF has acted as a flexible and fast response to the issues students face both in the transition to Higher Education (students in this group are often caught in an income gap when leaving employment, or the benefits system, when starting their studies), and to the inherent delays within the student finance system. The FCF has also long been used to address childcare costs not met by the statutory funding system (which meets only a maximum 85% of costs).

  1. Disabled students

The FCF has been an established funding source for meeting the cost of diagnostic tests, and other costs not met by the Disabled Students Allowance (DSA) for many years. These costs fall outside those met by the DSA. The instances of students requiring diagnostic documentation specifically in order to access their entitlement to the DSA are well documented, and a significant proportion of the FCF budget helps to meet these costs. The removal of the FCF threatens to undermine students’ access to diagnostic testing (in many cases on a non income-assessed basis) and at best places this responsibility upon HEIs.

An additional concern for this group is the lack of opportunity they are likely to have to supplement their financial support through employment alongside their studies. The introduction of the Personal Independence Payment (PIP) has seen long delays in processing welfare benefits which are an essential contribution to the costs faced by disabled students. The absence of additional sources of income commonly gives rise to applications for FCF funding from disabled students.

 We are concerned that the lack of reference to a national scheme of published guidance could have an adverse impact on the experience of disabled students nationally.

  1. Care Leavers and estranged students

The definition of care leaver is very specific in terms of those who are able to access Local Authority support towards their cost of study (which is limited to £2,000 over the duration of the course). Many HEIs follow a similar definition, which can leave students from a care background with a more complex history with no parental support (either natural or corporate) and entirely self reliant. Similarly, students who have become estranged from their parents do not have recourse to the additional financial support such relationships commonly provide. The withdrawal of FCF funds can be expected to have a direct and detrimental effect on these students if they are not given an opportunity to access discretionary funds to help support their studies.

  1. Final Year Students

This group has regularly sought assistance from the FCF and has been given priority due to the reduced amount of student loan available in their final year. Whilst facing a reduction in their income, this is seldom reflected in their essential costs, e.g. student rent agreements have standard terms, with no differential according to year of study. It is vital final year students continue to have access (and be given priority) to FCF funding so that the investment in their studies over several years is not threatened by unexpected challenges at the end of their studies.

  1. Students in the ‘squeezed middle’

Students whose household income is above £50,753 receive no grant support alongside their loan. Whilst there is a notional expectation a household contribution will be made available to supplement the student finance they receive, this is no longer publicised by government agencies, and nor is it always possible. The student finance system takes no account of household expenditure against essential items, so it is extremely common to see students from higher income backgrounds struggling to get by on reduced student financial support. Indeed, the recent economic situation has given rise to a significant number of cases where households have faced bankruptcy or other insolvency solutions which are not taken into account. These students are another group who have come to rely on discretionary sources of financial support such as the FCF.

The removal of the FCF budget, without adequate safeguards put in place to ensure HEIs continue to make arrangements to continue to operate a discretionary fund in the same manner and of similar value, will be significantly detrimental to the above groups, but will also have an impact on the wider student population.

We are also appalled at the timing of this announcement, giving HEI’s just 11 days notice before the official start of the new term. This does not give HEI’s sufficient time to plan for the forthcoming academic year and is a reckless and irresponsible decision made by the Welsh Government. It is also concerning that this decision has been made just 2 years after the expense of a Welsh Government Consultation on the Fund which concluded that the fund should remain.

Thank you for your consideration of the above, and I look forward to hearing from you.

Yours sincerely

Rob Ellis

NASMA Treasurer

c/o Swansea University

Singleton Park

SA2 8PP

T: 01792 602979

E: r.j.ellis@swansea.ac.uk