THE Scottish National Party appears certain to go into the 2007 Holyrood elections promising to abolish student loans and replace them with grants, claiming that there would be no extra cost to the taxpayer.

The party’s annual conference at Aviemore yesterday overwhelmingly approved a resolution from Fiona Hyslop, Shadow Education Minister, which also commits the party to “examine writing off the outstanding student loans debt of all graduates”, despite a warning from one delegate that this could cost an SNP-led Scottish Executive about £700 million.

Ms Hyslop told the conference that the average student left university this year with about £17,000 of debt. Next April they will get a bill for another £2,000 for the Scottish graduate endowment, the system introduced by the Executive where students do not pay upfront tuition fees but pay back cash for their tuition when they have graduated and are earning £15,000.

She said that graduates leaving university now and starting out on their careers had found themselves on the receiving end of “a large whammy”. Scotland’s best interests lay in ensuring that the country’s education system remained free at the point of delivery, paid for out of central taxation. She argued that the change from loans to grants would be at worst cost-neutral because the present system meant that the student loan subsidy — the money paid by the Government to banks to compensate for “soft” interest rates charged to students — amounted to £103 million.

Taxpayers were paying through the nose, Ms Hyslop said, for a loans and graduate debt scheme which, she said, was debilitating. The Executive’s own accounts showed that they had written off well over one third of debt already, knowing it could not be repaid. The SNP’s alternative was a “bold and imaginative” policy.

There was one note of dissent from Gerry Fisher, a delegate from Dollar in Perthshire, who called on the resolution to be remitted back to national council, saying the promise to examine writing off outstanding debt amounted to “weasel words” and needed to be clarified. He said that the resolution did not make clear either whether a grants system would be with or without parental contribution and criticised Ms Hyslop for announcing the policy several weeks ago without getting the conference’s agreement first — a charge denied by the shadow minister.

Mr Fisher said: “If every student got this, it would cost £700 million. I would like to think we would have such a policy but I do not think we can.” His call to remit back attracted no support on the floor of the conference, however.

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