Saving for a brainy day

Citation

(2004), "Saving for a brainy day", Education + Training, Vol. 46 No. 5. https://doi.org/10.1108/et.2004.00446eab.002

Saving for a brainy day

Saving for a brainy day

A culture change in personal savings is needed if individuals and their families are to afford lifelong learning. Research from the Saving for Learning project, carried out by the Learning and Skills Development Agency (LSDA), warns that people will be expected to make an increased contribution to the costs of their education after the age of 18 – primarily for university undergraduate courses and adult further education – and take more personal responsibility for investing in their own learning.

The research highlights the shift away from public funding of post-18 education, towards individuals and families taking more responsibility for tuition fees and maintenance. It stresses the likely future squeeze on personal savings, with the need to save for retirement and health care competing with the desire to save for learning.

As Government policy is prioritizing those with few qualifications and those with basic-skill needs for public subsidy, the amount those individuals who have higher qualifications will be expected to pay towards their education is likely to rise. This will affect university undergraduates and most adults in further education, both part-time and full-time students.

The research, however, finds little evidence of systematic saving by individuals or families, other than among households intending to send their children to fee-paying schools. Drawing on evidence from the USA, Japan, New Zealand, Denmark and the Netherlands, the report says: “International comparisons suggest that the Government needs to make very clear what is expected of individuals by way of personal financial contributions to learning and that this issue be widely debated.”

The research identifies the groups for whom saving for learning is most likely to apply as:

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  families (parents and grandparents) who intend to send their children to fee-paying schools;

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  individuals (and their families) aiming for higher education, as full-time or part-time students;

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  adults aiming for further or adult education, other than those with basic skills needs or few qualifications;

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  people in employment who want to update their knowledge and skills or gain professional qualifications.

The report suggests that finding the right “trigger” that will encourage people to save for their own, or their children’s, education is crucial. People are less likely to save for learning if it is easy to gain access to alternative sources of finance such as student loans and grants. The research also shows that tax incentives or breaks for education-related financial products have little impact on saving for learning. There are no such products in Japan, yet around 9 per cent of all savings in Japan are set aside for learning.

Mick Fletcher, research manager at the Learning and Skills Development Agency, said: “Individuals will have to contribute more to the costs of their own lifelong learning and that of their children, and student loans are not the only means of achieving this. A better understanding of how to encourage people to invest in their own future learning is needed, together with the policy levers that will encourage savings.

“It is crucial that the likely costs of education are made clear to people. Few of the attempts to encourage people to invest in their own lifelong learning so far have been successful, so we have to consider how individuals can best be helped to finance the investments they will need to make. This means stable education policies on fees. But it also means changing people’s behaviour so that investing and saving for learning becomes commonplace.”

Saving for Learning in the UK is obtainable from: Information Services, LSDA, Regent Arcade House, 19-25 Argyll Street, London W1F 7LS.