The long-term impact of student loans in further education

This project will explore the long-term impacts of the Advanced Learner Loan on the education and employment outcomes of prospective learners and the fiscal implications for government. 

Why this project is important

Adult participation in further education has collapsed over the past two decades, with the number of publicly-funded qualifications taken by adults falling from 5.6 million in the mid-2000s to just 2.3 million by 2023. This sharp decline raises questions about whether the current system is supporting those most in need of a second chance; particularly the nearly 40% of individuals in England who do not achieve an A Level or equivalent qualification by age 19. 

Since 2013, income-contingent loans have replaced grants as the main form of financial support for further education learners. This model is set to be expanded under the Lifelong Learning Entitlement, which will give individuals a flexible loan entitlement to fund education throughout their lives.  

What it will involve

Despite its policy significance, there is little evidence on how the current loan-based funding system has affected learners. Over a decade on from its introduction, the research team aim to use linked administrative data to answer the following questions: 

1. How do income-contingent loans in further education affect participation, attainment, and subject choice? 
2. What are the impacts on employment, earnings, benefit receipt, and career trajectories – including whether learners switch sectors or progress within them? 
3. How do these impacts vary by socioeconomic background, gender, ethnicity, and region – and have loans narrowed or widened participation gaps? 
4. What are the fiscal consequences for government of income-contingent loans in further education? 

An event study framework exploiting variations in exposure to Advanced Learner Loans across birth cohorts will be employed. Individuals’ education and labour market outcomes over eight years will be assessed and subgroup analysis will identify disparities by socioeconomic background, gender, ethnicity, and geography.  Fiscal impacts will be evaluated by estimating the net cost or savings to the government compared to the pre-reform system.   

How it will make a difference

Findings will be directly shared with key stakeholders, including government policymakers, further education providers, and the public, to inform the development of equitable and effective adult education finance systems.