Loans for Learning: The Loans versus Grants Debate in International Perspective

After 25 years of debate, the government has announced that it intends to introduce a system of 'top-up' loans, to supplement maintenance grants for students in higher education. Other countries, including Sweden, West Germany and the USA already have student loan schemes and the Australian Government has recently announced a 'higher education contribution', to be collected via the tax system. There have been proposals in Britain for a more radical system of student loans, collected via National Insurance contributions, or for 'vouchers' for tuition fees. This paper considers the arguments for and against loans, and the various policy options and concludes that the time is right to introduce a combination of grants and loans, but that the new system should be carefully monitored.