England’s planned new lifelong loans are seen by government as a way to “divert demand” away from degrees deemed poor value, but face barriers on a required “complete remake of the student finance system” and from the Treasury.

Though the Westminster government has introduced legislation with the aim of fully rolling out a lifelong loan entitlement (LLE) in 2025, allowing adult learners to study short courses flexibly or build up to a full degree over time, the sector is awaiting further key details on the proposed nature of the system.

Some of those details are expected to come in the new year, in the government’s much-delayed higher education policy consultation, also expected to contain plans for a minimum entry requirement (MER), or perhaps some form of student number controls (SNC), to limit entry to higher education.

The government’s adoption of the LLE is the result of work by Baroness Wolf, a King’s College London professor who is now also skills and workforce adviser in the Number 10 Policy Unit, a long-standing advocate of lifelong learning accounts who believes that higher education expansion has failed to deliver the productivity benefits expected by governments.

Tim Blackman, the Open University vice-chancellor, said lifelong loans were part of a policy picture in which the government “wants to divert demand from three-year full-time degree programmes in subjects and institutions that are not seen as achieving good outcomes”, where graduates are paying back a relatively low proportion of their loans. “There is a view [in government] that these students could be better served with shorter, more vocational courses in either FE or HE,” he added.

Such shorter courses would also be less costly to the public purse than full-time residential degrees.

While the Open University welcomed the LLE “as a way to access higher education in England more flexibly and enable learners to receive loan funding over a working lifetime”, there was complex detail to work out, Professor Blackman continued.

Changing the current system, in which student loans are conditional on registering for a qualification, to one in which students can receive a loan to study for a single module “runs a number of risks, including the sheer cost of changing [Student Loans Company] and provider systems to manage this, and the danger that single modules become dead ends for the student”, he warned.

“A qualification has more currency than a module, and the government could achieve its objectives through qualifications rather than what might become a ‘supermarket of modules’,” Professor Blackman added.

Gordon McKenzie, chief executive of GuildHE and a former senior civil servant responsible for higher education, said that lifelong loans would “require a complete remake of the student finance system”.

Sir Chris Husbands, the Sheffield Hallam University vice-chancellor, agreed there is a “sheer technical challenge” to the LLE. “It will require a reshaping of the student finance system, which is simply not geared around short course provision. That will need to be done in a way which does not over-bureaucratise the loan system for full-time undergraduates – so the SLC will have some really tough choices about running parallel systems,” he said.

Sir Chris added that while “lifelong learning loans have the potential to make a big contribution to reskilling”, it was “important not to overstate the loan appetite for mid-career adults, who will have multiple financial commitments”.

Rachel Hewitt, chief executive of the MillionPlus group of modern universities, said the LLE could address recent steep declines in mature student numbers. But she added: “In order to make the system work, the student loan system will need to be rethought to ensure students are fully supported throughout their studies, in terms of both fees and living costs.”

Mr McKenzie was sceptical about the extent to which lifelong loans would change older learners’ behaviour in a system that will remain fee based, given “evidence that the decline in part-time HE in England was driven by higher fees backed by loans”.

“So I think if you leave it to the market alone, then behavioural change will be slow and at the margins,” he continued. “And I assume that is why government…will be using the expected consultations or announcements on MER, SNC to limit access – a bit – to the full-time level 6 route.”

Meanwhile, concerns in the Treasury – already worried about the existing cost of student loans – are another major factor in development of the LLE.

The Treasury’s questions, said Mr McKenzie, will be around whether the “change, upheaval and cost” of creating the LLE will “result in behavioural change that improves skill take-up and productivity”; the “unknown” proportion of loans that will not be repaid “because of unknown labour market outcomes of smaller chunks of learning”; and “controlling the cost of the system” if scepticism about behaviour changes proves inaccurate and “this really does boost loan and learning take-up massively”.