Recently the Times Higher Education reported that Barclays Bank is working on proposals to extend the Professional and Career Development Loan (PCDL) scheme as a way of plugging the postgraduate funding gap in England. As we all know, the economic climate is such that banks in most cases do not want to lend out money except where the risk is very low. The model Barclays is exploring is based on banks ‘risk-sharing’ with universities, though the details of the scheme remain unclear.
Currently very few postgraduates take out Career Development Loans. Twelve per cent of full-time and six per cent of part-time respondents to the taught postgraduate Broke and Broken survey had taken out a PCDL. But the costs of postgraduate courses are increasing, meaning there is a danger that more and more prospective postgraduates will be priced out of postgraduate study.
Here’s why career development loans are far from being the solution to the postgraduate funding crisis:
1. The terms of the loan are currently stringent and deeply unprogressive: annual interest rates are typically around 9-10 per cent (Barclays offers 9.9 per cent) with immediate repayment, commencing two months after course completion, unless in cases of withdrawal, where immediate repayment is required. Repayment is required regardless of an individual’s employment situation and earnings.
2. There is no guarantee of being loaned the full cost of the course; this will only get worse if postgraduate fee costs continue to rise.
3. Access to the career development loan is dependent on the bank’s assessment of the credit-worthiness of the individual; as such they will only compound inequality based on socioeconomic background. People who have savings, or well-off families who can act as co-signatories will benefit; those without capital will be turned away.
4. A solution based on risk sharing with universities immediately demands the question, which universities? There is a strong likelihood that unless universities enter into a collaborative arrangement wherein all contribute to a communal funding pot (hardly likely in this era of intensifying competition), what we are really talking about is wealthy, ancient universities who can afford to take the risk.
So, to recap, we are talking about a scheme that is designed to increase profit the private sector, that targets resource at the well-to-do and/or mobile postgraduate population and that will only intensify a damaging market in postgraduate provision.
The government must think again. In order to avert a crisis in postgraduate education we strongly encourage Ministers, MPs and other stakeholders to consider sustainable alternatives that ensure fair access to postgraduate study, something that no Career Development Loans scheme will ever achieve.