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  • Writer's pictureAndy Forbes

“It’s Loans, Jim, but not as we know them!”

At the heart of the government’s new Lifelong Loan Entitlement initiative is a reliance on adults taking on loans to fund the courses they hope will advance their career and earning prospects.

But there is plenty of evidence that loans are not popular with most working adults, and if this is true, it will be a big barrier to participation, and threaten to undermine the success of this exciting new idea.

It’s worth noting that the loans envisaged as being on offer through the proposed new LLE system are unlike any other type of loan. When a house owner takes out a loan for a new kitchen, for example, they will expect to get an immediate benefit in terms of the utility and enjoyment of having a lovely new facility. They will also hope that the new kitchen will increase the value of the house, strengthening their position in the housing market.

In contrast, a loan for an adult taking a course and qualification to re-skill or up-skill themselves, doesn’t deliver any immediate tangible benefit. The course may be enjoyable and interesting, but only when it’s successfully completed will it deliver increased earnings and better career prospects, and this benefit is in most cases not guaranteed. Many factors, such as the overall health of the economy and the state of the labour market will play a part in whether a better paid job will be secured, not to mention personal factors such as job search and interview skills. So adults are, in essence, being asked to take out a speculative loan. This is only likely to be attractive to those who have a strong appetite for risk, usually because they have the financial resources to cope with the possibility of a poor return on their investment.

Unlike a kitchen loan, a learning loan will not be immediately repayable, but repaid through the tax system. But the prospect of having to pay a significant amount of extra income tax for decades following completion of one or more courses means that taking a Lifelong Learning Loan is potentially a high-stakes decision. Given the other pressures on adult personal finances – rents, mortgages, childcare, living costs, etc – this is not an attractive proposition, except for individuals who are relatively well off and have spare disposable income at their command.

The LLE is a great idea – potentially a game-changer for adult education and a long-overdue solution to the English economy’s skill shortage challenge. But without a grant element it is likely to have limited appeal and limited success. Universal grants are not necessarily needed; a grant strategy could be designed to target those on lower incomes, or training courses in vital priority sectors, or both. But some form of access to grants is going to be vital if lifelong learning is to become a widespread reality.

There’s no doubt that loans will play an important part in managing the cost to the public purse in any Lifelong Learning system. But relying on loans is likely to reduce participation significantly and risks entrenching inequality of access to opportunities. It’s good to see this acknowledged in the DfE’s recent consultations, but the whole nature and structure of a loan system that works for adults needs to be explored in depth. It won’t be sufficient just to cut and paste the current student loan system into the LLE.

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