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Dear Vice-Chancellor or Principal

Finance arrangements for Erasmus and other student mobility years abroad from 2013-14

1. This letter provides a summary of the financial arrangements relating to students taking a whole year abroad as part of their studies. We do not require a reply to this letter.

2. New financial arrangements are being introduced from 2014-15, but this letter also sets out the transitional arrangements that are being made for 2013‑14. The arrangements for supporting study years abroad seek to balance the needs of students and institutions, and we are confident that, over the duration of a typical four-year course that includes a year abroad, the rate of resource for institutions will be at least maintained. Annex A provides a table summarising the finance arrangements for different types of years abroad in 2013-14 and 2014-15.

Background

3. Erasmus is the European Union’s action scheme for the mobility of university students, part of its Lifelong Learning Programme. On 3 May 2012, the Government announced new measures to support students taking an Erasmus year abroad that will come into force in the academic year 2014-15 at English institutions. The announcement set out the arrangements that would apply to students commencing higher education study under the new tuition fee regime from September 2012.

4. HEFCE welcomed the Government announcement on 3 May and has subsequently confirmed (in paragraphs 154 to 159 of ‘Student number controls and teaching funding in 2013‑14 and beyond: Summary of responses to consultation and decisions made’, HEFCE 2012/19) the support it proposes to provide for years abroad from 2014-15. HEFCE had previously committed (in paragraphs 89 to 92 of ‘Teaching funding and student number control: Consultation on changes to be implemented in 2012-13, HEFCE 2011/20) to continuing to provide fee compensation in 2012-13 and 2013-14 for students taking an Erasmus whole year abroad.

5. On 11 March 2013, the Minister for Universities and Science also announced in a written ministerial statement to Parliament new tuition fee arrangements for students taking a sandwich year out from 2014-15 onward. The written statement is available at the parliament web-site, and further information is available on the Student Finance England Practitioners’ web-site.

6. This letter summarises the fee and funding arrangements for those taking a whole year abroad from 2013-14 onward. These arrangements vary depending on the year in question (the transitional arrangements for 2013-14 differ from those from 2014-15 onward), whether the year abroad is a study year or a work placement (sandwich) year, and whether it is taken under the Erasmus scheme.

Years taken abroad in 2014-15

7. From 2014-15 onward, a new regulated fee limit will apply to ‘new-regime’ students (that is, those subject to the fee and funding regime introduced from 1 September 2012) who are taking a year abroad under the Erasmus scheme, or as a study (rather than sandwich) year abroad outside the Erasmus scheme. This will be set at 15 per cent of the fees chargeable to most other full-time undergraduates: this is equivalent to a fee of up to £1,350 (for students attending institutions where the higher tuition fee amount is permitted) or up to £900 (for those attending institutions where only the basic tuition fee amount is permitted). Tuition fee loans will be available to eligible students to cover these costs.

8. For students who are taking a sandwich year out outside the Erasmus scheme (whether in or outside the UK) from 2014-15, the regulated fee limit for new-regime students will be set at 20 per cent of the fees chargeable to most full-time undergraduates: this is equivalent to £1,800 (for students attending institutions where the higher tuition fee amount is permitted) or £1,200 (for those attending institutions where only the basic tuition fee amount is permitted). Tuition fee loans will continue to be available to eligible students to cover these costs.

9. We do not expect there to be many ‘old-regime’ students taking a year abroad in 2014-15: as such students would have commenced their courses prior to 1 September 2012, they will generally be in their fourth, or later, year of their course. However, any old-regime students taking a year abroad in 2014-15 will be subject to the old-regime fee and loan arrangements – that is:

  1. Institutions will be expected not to charge a tuition fee to eligible old-regime students taking a year abroad under the Erasmus scheme. No fee loan will be available to them.
  2. Institutions will be able to charge a tuition fee to old-regime students taking a year abroad that is not under the Erasmus scheme (irrespective of whether this is a study or sandwich year abroad). The maximum fee that can be charged is approximately half that chargeable to most other full-time undergraduates starting under the old fee regime: this is a fee of up to £1,725 (for students attending institutions where the higher tuition fee amount is permitted) or up to £680 (for those attending institutions where only the basic tuition fee amount is permitted). Fee loans will be available to eligible students.

10. From 2014-15, HEFCE will provide a new allocation of funding to institutions in respect of old-regime and new-regime students taking:

  • a study year abroad under the Erasmus scheme
  • a work placement (sandwich) year abroad under the Erasmus scheme
  • a study year abroad which is not under the Erasmus scheme.

11. This new allocation is intended to support institutions’ participation in exchange programmes, and recognises that they will face additional costs in teaching and supporting incoming exchange students, to whom they will generally be unable to charge a tuition fee (this is a requirement of the Erasmus programme and may also apply to other student mobility schemes). It is not a form of fee compensation or subsidy for individual students, but an overall allocation for an institution as part of its block grant. The new allocation will be calculated on the basis of the numbers of those students described in the previous paragraph, specifically those whom the institution reports as outgoing in the previous year (so that the allocation for 2014-15 will be informed by student numbers in 2013-14). These numbers are counted as a proxy measure for the activity of institutions in exchange programmes. We expect the rate per (headcount) student to be approximately £2,250, subject to sufficient funding being available to us from the Department for Business, Innovation and Skills. The allocation will not be made in respect of work placement years abroad which are not taken under the Erasmus scheme, because such sandwich years out are not expected to be part of an exchange programme.

12. In addition to the new allocation, outgoing year abroad students will also potentially count towards other elements of HEFCE teaching grant as appropriate. However, any such other allocations are likely to be small: we expect there to be very few old-regime students, to whom historic higher rates of teaching grant would apply, taking a year abroad from 2014-15 onward; and we expect the large majority of new-regime undergraduate students taking a year abroad in 2014‑15 to fall within our price groups C2 and D, which do not attract our funding for high-cost subjects.

Years taken abroad in 2013-14

13. For many years, we have provided fee compensation to institutions so that they do not charge tuition fees to students taking a whole Erasmus year abroad: such students are not currently eligible for a tuition fee loan. The fee compensation is provided at the maximum level of fee that would otherwise be chargeable for the year (that is, £1,725 for 2012-13, which is the maximum fee for a non-Erasmus year abroad chargeable to old-regime students attending an institution where the higher tuition fee amount is permitted). Students taking a year abroad outside the Erasmus scheme have not counted towards allocations of fee compensation. Instead, institutions have been able to charge them a fee and eligible students have had access to a fee loan to pay for it.

14. In addition to Erasmus fee compensation, all students taking a year abroad (whether or not under the Erasmus scheme) have also counted towards HEFCE’s main allocations of teaching grant. For 2012-13, all such students will have commenced their courses prior to 1 September 2012 and are therefore attracting the historically higher rates of grant that apply to old‑regime students.

15. Students taking an Erasmus year abroad in 2013-14, whether they count as old‑regime or new-regime, will not be eligible for a tuition fee loan in that year and we therefore do not expect institutions to charge them a fee. Instead, we are continuing to provide Erasmus fee compensation for 2013-14, but this will be the last year in which we do so: from 2014-15 onward it will be replaced by the new arrangements described in paragraphs 10 to 12.

16. As most students taking a year abroad do so in their third year of study, we expect the large majority taking such a year in 2013-14 still to count as old-regime students. For them, the previous arrangements continue to apply. However, a small number of students take an Erasmus year abroad in their second year of study, and this will apply to some new-regime students in 2013-14. We need transitional arrangements to deal with this. In March we announced our initial allocations of recurrent funding for 2013-14, including of Erasmus fee compensation. The allocations were informed by the Erasmus student numbers reported by institutions for 2012-13. Data were collected separately on the numbers of such students who started their courses in 2011-12 (and are therefore taking their year abroad in year 2) and those who started their courses in an earlier year (and are taking their year abroad in year 3+). HEFCE’s fee compensation for institutions was calculated at a rate of £4,500 per student for the former group and £1,725 for the latter group. As in previous years, fee compensation has not been paid in relation to years abroad that are not part of the Erasmus scheme: fee loans are available to eligible students to meet the fees that institutions may charge for these.

17. In addition, students taking a year abroad in 2013-14 (whether or not under the Erasmus scheme) will count towards our other allocations of teaching grant, as appropriate. Those taking a work placement (sandwich) year abroad are counted as 0.5 of a full-time equivalent (FTE) student, while those taking a full-time study year abroad are counted as one FTE. Higher rates of grant are paid in relation to old-regime students, while new-regime undergraduates will only be counted towards funding for high-cost subjects if they are in price groups A, B or C1.

Further information

18. This letter provides a summary of the approach to supporting years abroad, but inevitably cannot provide full details about the eligibility of individual students for student support or their liability for regulated tuition fees. Any questions about student support or tuition fee regulations should be addressed to Student Finance England’s Practitioners Helpline (0845 602 0583, e-mail SSIN_queries@slc.co.uk).

19. Any questions about HEFCE’s funding allocations should be addressed to Higher Education Policy advisers. HEFCE contacts for institutions can be found via a searchable list.

20. Figures quoted in this letter relating to 2014-15 tuition fee limits and loans have been informed by the written ministerial statement to Parliament of 11 March 2013. Figures are subject to confirmation by statutory instrument, expected during the summer. Decisions on increasing the maximum rate for tuition fees are taken by Ministers on an annual basis, and are subject to Parliamentary approval.

21. We believe that these finance arrangements to support years abroad strike the right balance in protecting demand from students for longer courses and the supply of places by institutions, and that over the course of a typical four-year degree that includes such a year, the resource rates available to institutions per student will be at least maintained.

Yours sincerely

Sir Alan Langlands

Chief Executive

Date: 21 May 2013

Ref: Circular letter 14/2013

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Finance, Planning, Departments organising study or work placements abroad

Enquiries should be directed to:

For questions about HEFCE funding allocations contact your HEFCE higher education policy adviser. HEFCE contacts for institutions can be found via a searchable list.

For questions about tuition fee and student support regulations contact Student Finance England’s Practitioners Helpline on 0845 602 0583, e‑mail SSIN_queries@slc.co.uk.