The Education (Student Support) Regulations 1998

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1st September 1998, are the first Regulations made under section 22 of the Teaching and Higher Education Act 1998. They provide for loans for maintenance for eligible students attending designated courses of higher education beginning on or after 1st September 1998. Means tested grants for maintenance and fees for such courses will be made by local education authorities under the Education (Mandatory Awards) Regulations 1998 until 1st September 1999, when it is intended that an expanded version of these Regulations will provide for grants for fees as well as loans for maintenance.

Students are eligible students for the purposes of the Act and Regulations if on the first day of the course they are settled in the United Kingdom for the purposes of the Immigration Act 1971, on that day they are ordinarily resident in England and Wales, and for the three years immediately preceding that day they have been ordinarily resident in the United Kingdom and Islands for purposes other than receiving full-time education (regulation 3(1) and Schedule 1 paragraphs 1 and 7). Students may also be eligible if they are refugees, if they have been given exceptional leave to remain in the United Kingdom, or if they are European Economic Area migrant workers, or the spouses or children of such workers (Schedule 1, paragraphs 2 to 6). Such students must also be ordinarily resident in England and Wales on the first day of the course, and in some cases meet other residence conditions (Schedule 1, paragraph 7).

To be eligible students must also attend a designated course, be under the age of 50 on the first day of the course, not be eligible for a loan under the Education (Student Loans) Act 1990 (which provides for the existing mortgage style student loans for students who began their course before 1st September 1998, and certain other students), not have received any student loan in relation to an academic year of another course which ended after the first day of the academic year of their present course, not be eligible for certain National Health Service bursaries or awards, not be in breach of any obligation to repay any other student loan, have ratified any other student loan they received when they were under the age of 18, and have a bank or building society account into which the loan can be paid (regulation 3(1)).

Courses which are designated courses for the purposes of the Act and Regulations include full-time courses for a first degree, for the Diploma of Higher Education, for the Higher National Diploma or certain Higher National Certificates, for the further training of teachers or youth and community workers, for certain professional examinations, and full-time courses of initial training for teachers (regulation 4(1) and Schedule 2). Such courses must be of at least one academic year’s duration, and be provided at least in part by an institution or institutions in the United Kingdom which are maintained or assisted by recurrent grants out of public funds (regulation 4(1)). The Secretary of State may designate other courses by administrative act from time to time (regulation 4(4)).

Students are required to demonstrate their eligibility by completing a questionnaire and supplying supporting evidence to the Secretary of State (regulation 5(1) to (3)). If the Secretary of State is satisfied that the student is eligible he shall issue an eligibility form to the student, who shall complete and sign it (regulation 5(4) to (6)). The Secretary of State then signs a certificate of eligibility on this form, and issues a numbered application form to the student (regulation 5(7) and (8)). In practice for the first year of the operation of these Regulations these functions will be transferred under section 23(1) of the Act to higher education institutions, who presently perform similar functions in relation to loans under the Education (Student Loans) Act 1990.

Students whose eligibility has been certified may apply for a loan for maintenance not later than a month before the end of the academic year in question, and must agree to repay any moneys lent to them with interest and applicable charges and penalties (regulation 6(1) to (3)). They may apply to borrow such amount not exceeding the maxima referred to in regulation 7 as they wish (regulation 6(2)(h)), and if they have not applied for the maximum amount the first time may apply once more for a further amount, but not so that the maxima are exceeded (regulation 6(6)). If the Secretary of State is satisfied that the student is entitled to a loan he must pay it to the student in accordance with regulation 8 (regulation 6(5) and (11)).

The amounts to be lent shall be paid in three, two or one instalment, depending on whether the first instalment is paid during the first, second or third or fourth quarter of the academic year respectively (regulation 8(1) and (2)). For the purposes of the Regulations the academic year is divided into quarters regardless of whether the year has terms or semesters, the quarters beginning on 1st September, 1st January, 1st April and 1st July (regulation 2(1)). Payment of the first instalment must be made within 30 days of the receipt of a satisfactory application and of subsequent instalments during the relevant quarters (regulation 8(4)). In the case of a traditional academic year beginning in the autumn the first instalment will be paid within 30 days of receiving an application in the autumn, the second instalment will be paid by 30th January, and the third instalment will be paid by 30th April. In practice the function of making payment under regulation 8 will be delegated to the Student Loans Company Limited in Glasgow under section 23(4) of the Act.

Payments of instalments will not be made once a student has withdrawn from, abandoned or been expelled from his course (regulation 8(6)). In the case of absence from the course for more than 60 days as a result of illness, or for any period for any other reason, the Secretary of State may decide to suspend payments or to continue to make them if suspension of them would cause exceptional hardship (regulation 8(7) and (8)). When payments are suspended and the student returns to his course the Secretary of State may pay further instalments, but the overall amount lent for the year must not exceed the amount the Secretary of State considers appropriate, in light of the length and circumstances of the absence (regulation 8(9)). The Secretary of State’s discretion to suspend payments and to decide the amount payable for a year in which the student has been absent from his course will in practice be transferred to higher education institutions.

Provision is made in regulation 9 for a student who transfers from one course to another during the course of the academic year to continue to receive instalments of his loan (regulation 9). In the case of a student who transfers to another designated course at the same institution he is only required to provide details of the transfer (regulation 9(2)), but in the case of a student who transfers to another designated course at a different institution he must apply again, and if eligible will be entitled to the balance of any instalments payable (regulation 9(3) to (5)).

A student who has applied to borrow the maximum amount in relation to an academic year may apply for a hardship loan of not less than £100 and not more than £250 (regulation 10(1) and (2)). He may apply for this loan whether or not he has received all the instalments payable in respect of the academic year at any time until one month before the end of that year. He must first satisfy the Secretary of State that due to exceptional financial hardship he may not be able to continue to attend for the balance of the academic year (regulation 10(3) to (6)). In practice the function of determining whether a student should receive a hardship loan and the amount of the loan will be transferred to higher education institutions under section 23(1) of the Act. If it is certified that the student ought to receive a hardship loan the student may submit the application, and the amount to be lent will be paid within fourteen days of receipt of a satisfactory application (regulation 10(7)). The function of paying the loan will in practice be delegated to the Student Loans Company Limited under section 23(4) of the Act.

Provision is made for the interest which the loans will bear, which is calculated daily and compounded monthly (regulation 11). In accordance with section 22(4) the prescribed rate is no higher than that which the Secretary of State is satisfied is required to maintain the value in real terms of the outstanding amount of loans, and does not exceed the rate specified for the purposes of exemption of certain consumer credit agreements by the Consumer Credit (Exempt Agreements) Order 1998.

Borrowers may repay their loans at any time without penalty (regulation 12(1)), but shall not be required to repay any moneys they owe before 6th April 2000 (regulation 12(2)). Before then it is intended that regulations providing for the repayment of loans through the tax system will be made, and provision for repayment by persons not subject to that system will also be made. The liability of a borrower will be cancelled if he dies, if he is not in breach of any obligation to repay any student loan and he reaches the age of 65, or if he receives a disability related benefit and the Secretary of State is satisfied that because of his disability he is permanently unfit for work (regulation 12(3)).

Instalments of student loans paid or payable after the commencement of a student’s bankruptcy, or in Scotland the sequestration of his estate, shall not form part of his estate, and accordingly cannot be claimed by his trustee (regulation 13).

Applicants and borrowers are required to inform the Secretary of State when they withdraw, abandon or are expelled from their courses, when they cease to attend them for the balance of the academic year for any reason, when they transfer to another course at the same or another institution, or are absent from their course for any reasons for more than 60 days (regulation 14(1)). They are also required to provide the Secretary of State with up to date information about their residence and bank account (regulation 14(2)).