New student loans scheme emerges – but not from the States

Wednesday 13 September 2017

Island students will now be able to to borrow thousands of pounds to help fund their university education thanks to a new student loans scheme.

Treasury Minister Alan Maclean confirmed yesterday that the government were evaluating their current grants system and “variants of a loan scheme” to help locals cover the rocketing costs of higher education and that proposals would be introduced with the 2018 Budget.

But local company Cherry Godfrey have gone a step further. They are now offering a “flexible” student loans scheme to aspiring undergraduates and masters students across the Channel Islands, which can be taken alongside other grants or loans.

Students are first invited to a no-obligation consultation to discuss their options, which can be tailored to fit around their own financial situation. Once a loan is set up, students are named on the loan, but parents are asked to act as a guarantor.

Jersey and Guernsey office Director Tanzy Cherry explained: “Obviously we all know the UK student loan model is just broken and it doesn’t work, and we wanted to do anything we could do to not be like that and actually make something work. The scheme that we’ve come up with is perfect for students because it is flexible and it’s bespoke.

Video: Cherry Godfrey's scheme explained in a video.

“We’ve worked on the basis of being guided by the student. If they’re working part-time while on a part-time course, they may prefer to finance it as a straight personal loan. But if they’re in full-time education and not earning too much we could do it as an interest only loan and refinance for the second year and any subsequent years and then convert that into a personal loan upon graduation at an affordable repayment.”

Upon leaving university, graduates can then choose how to pay back the loan, which they anticipate will be between six and 84 months depending on the graduate’s circumstances. Loans can be settled in full at any time, and there are no charges for overpayments or lump sums.

“We’re very conscious that you don’t graduate from university or college and walk into an extremely well-paid job. It doesn’t happen. So we’re trying to work with graduates to make those payments affordable,” Miss Cherry added.

Following extensive lobbying from members of the Student Loans Support Group, government officials explained during a series of Scrutiny hearings last year that they were concerned about underwriting a loan scheme due to the prospect of non-repayments.

Miss Cherry said that this had not been a concern for Cherry Godfrey, however. “We will use our same underwriting practices as we would for any other type of loan… Of course we wouldn’t want to lend irresponsibly, so we do have robust affordability checks.”

She added that the loan could also be beneficial to setting up students for the future employment and home ownership.

Pictured: A loans scheme would not only help graduates with their course costs, but allow them to build up a credit rating, Miss Cherry said.

“We think it’s very important to have the student named on the loan so that they can take some ownership and responsibility. It can help them build up a credit rating because you can’t do anything these days without a credit rating.”

Since the scheme’s soft launch earlier this year, Miss Cherry said that the response had been “extremely positive” and that the firm looked forward to helping more students of all ages.

It comes after a response to an Express Freedom of Information (FOI) request showed that while the government had given out more than £800,000 in postgraduate bursaries since 2009, only between six and 11 were given out each year, rather than the full 12 available. 

While Treasury have previously been accused of having their "heads in the sand" over the student loans issue, the Minister said that States Members can expect to be updated with a full set of proposals during the 2018 Budget briefing on 2 October.