Attitudes to Further Education Loans BIS May 2012

1. Attitudes to Further Education LoansBISMay 2012

2. 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

3. 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 createdworry 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

4. 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

5. 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

6. 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