Switch to LLE could ease universities¡¯ cash flow fears, says v-c

England¡¯s switch to the Lifelong Learning Entitlement (LLE) to pay for higher education courses could help ease universities¡¯ cash flow worries, according to the new vice-chancellor of The Open University.

David Phoenix, who took over at the UK¡¯s biggest institution by student numbers this month, has welcomed the?new guidelines released by the government, which will create a single post-18 student finance system in England.

Under?the incoming system, all adult learners will be able to take out student loans worth the equivalent of four years of higher education throughout the course of their lives. Policymakers hope this will enable more flexible and lifelong learning.?

The new guidelines are ¡°as good as we could have expected at this point,¡± Phoenix told?Times Higher Education, pointing to the integration of higher and further education funding, and the establishment of a link between funding and credits, as positive developments.?

Under the new rules, the price of tuition fees and loans will directly relate to the amount of credits a student takes, rather than the number of academic years over which they study. ¡°I think that¡¯s really positive,¡± Phoenix said.

Phoenix, who was previously vice-chancellor at London South Bank University, also believes that the new payment system could reduce upfront borrowing costs by institutions, helping to reduce interest payments at a time when?many universities are struggling financially.

Currently, universities are generally paid a quarter of tuition fees by the Student Loans Company when student intakes settle in October, with another quarter following in February. The remaining half is released in May.

Although it is understood that payments to providers will remain the same initially under the LLE, a future system whereby the money is released more flexibly could work better for institutions, said Phoenix.?

¡°If full-time degree courses are broken up into 30 credit modules, you could get your income in four times a year,¡± he said.

¡°If you¡¯re a university that currently doesn¡¯t have a lot of cash in the bank, then you¡¯re having to borrow money to get you through to the 50 per cent payment, so you¡¯re incurring interest charges.¡±

Universities have?previously lobbied the government?to change the system to help their cash flow throughout the year.

¡°By levelling out the payments over the year, it could be really beneficial to the sector, without the government having to put more money in, it¡¯s providing a reduced need for borrowing for operating costs for some institutions, so I think that¡¯s really positive,¡± said Phoenix.

The new funding model will also allow students to study at an accelerated rate if they wish, Phoenix added, something the OU was seeing increasing numbers looking to do, but was hard to offer under the current system.

¡°There¡¯s more people interested in work and study because they¡¯re trying to balance the need to generate cash and study, but what they don¡¯t want to do is spend six years getting a degree. They want to actually do it in a more compounded manner.¡±

However, he opposed the omission of maintenance loans for distance learning students, many of whom may work less while studying.

Under the new guidelines, the LLE will fund the tuition fees for designated distance learning and online courses but learners will only get maintenance loans and grants if they are required to attend in person, unless they cannot because of a disability.

Maintenance grants for all, regardless of whether they are studying in person, are important in creating a ¡°flexible system that¡¯s future-facing¡± and embraces ¡°new ways of studying¡±, Phoenix said.?

Overall, however, Phoenix said he welcomed the government¡¯s phased approach to the LLE.

¡°Don¡¯t try and get a perfect solution because you won¡¯t get one,¡± he said. ¡°Just start the ball rolling and try and pilot it with a limited portfolio so that we can actually start moving forward.¡±

helen.packer@timeshighereducation.com