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Option 3 of the consultation paper suggests a hybrid of options 1 and 2. The details of the policy will be developed following consideration of the consultation responses.

The evidence base around individuals'' participation in higher education (HE) has identified a range of financial, cultural, institutional and dispositional factors that influence individuals in their choice of pursuing HE. This evidence does not specifically refer to hardship in isolation but rather that the costs associated with study and a fear of debt generally can impact on individual choices to participate in HE. Costs and fear of debt are identified as key themes in the growing research evidence conducted with current and prospective students.

Ongoing Scottish Government research (Student Income, Expenditure and Debt survey) will provide more up to date information of students'' perceptions of debt and costs and assess the extent to which these are determining factors in students'' decisions to enter HE. This may provide more specific information relative to student hardship, however, will be unavailable until April 2009.

The consultation paper gives a number of principal options for investing £30 million. Option 1b suggests extending young students'' bursaries to more of the 23,315 independent students. The details of the policy, including number of students benefiting and the amount provided in each income category, will be developed following consideration of the consultation responses.

The level of graduate debt repayment is expected to increase by £10 million per annum from 2008-09. The budgeted debt repayments for 2008-09 are £56 million compared with budgeted student loan issues of £180.3 million and student loan subsidy costs of £71.4 million.

There are no legal restrictions in either primary or secondary legislation on the maximum amount of student loans which the Scottish ministers may award to students in higher education.

Increasing the levels of student loans would have budgetary implications which would have to be discussed more with HM Treasury. However, this is not Scottish Government policy.

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These statistics have been published for the years 2002-03 to 2007-08 in table 8 of Higher Education Student Support in Scotland 2007-08 available on the internet at:

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No legislative action would be required to implement Option 1, 2 or 3, but given the consultation is seeking the widest views possible, some respondents may suggest different changes to the student support system which would have legislative implications.

Option 2 of the consultation paper suggests an increase of the minimum income available. An investment of £30 million could for example provide for an increase to a level of £5,500 for those from the lowest incomes. The details of the policy, including the number of students and the amount of support provided in each income category, will be developed following consideration of the consultation responses.

I refer the member to the answer to question S3W-19000 on 8 January 2009. All answers to written parliamentary questions are available on the Parliament''s website, the search facility for which can be found at .

Unwinding of Provisions:

Student loan provisions are created and supplemented on a discounted cost basis, and each year the discount in the provision is unwound. This means that the balance of the provision is uprated by that part of the discounting which relates to the year of account because the provision has moved on a year.

The unwinding element is obtained by calculation with reference to the Retail Price Index (RPI) and the discount rate. For student loans accounting purposes, the RPI used is the RPI in September in the accounting year; and the discount rate is the rate that equates to the Treasury''s cost of capital for provisions.

This being the case, any changes in interest rates will not affect the unwinding calculations unless the Treasury change their cost of capital for provisions. Changes in the rate of inflation will only affect the unwinding calculation to the extent of the change in September in the year of account since that is the index which is utilised, in accordance with the Financial Reporting and Expenditure Manual. The amount of the change will also be dependent on the amount of residual provision available to be unwound.  Based on existing rates, the unwinding of discount on the write-off and debt sale subsidy provisions will be £23.8 million and £4.6 million respectively. This is in excess of budget by approximately £11.8 million and £0.6 million respectively and this additional cost will be met from within the Education and Lifelong Learning portfolio budgets.

Cost of Student Loans:

The cost of student loans is derived by application of the rate, currently 31%, determined by the student loans repayment model which incorporates long-term forecasts for both a discount factor and an RPI figure. Although these two elements are incorporated into the model on a long-term forecast basis, the cost of student loans rate is set for the Spending Review period, which is currently 2008-09 to 2010-11. Therefore, changes to the interest rate and rate of inflation will have no immediate effect on the cost of student loans for this spending review period.

These factors have no effect on the student loans advanced.