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The increase in student maintenance hides a critical shortfall in financial support for students

  • 26 January 2024
  • By Maddy Godin
  • This HEPI blog was kindly authored by Maddy Godin, Policy Researcher (Higher Education) at the Russell Group.

Yesterday’s announcement from Robert Halfon, Minister for Higher Education, confirmed the expected news that student maintenance loans will be increased by just 2.5%. This announcement also confirms the Russell Group’s recent projected analysis, which shows that students entitled to the maximum loan will now be almost £2000 worse off than if the loans had been increased in line with inflation since 2021.

Specifically, a full-time student living away from home outside London will be entitled to a maximum of £10,244, instead of the £12,130 they would be receiving if the loan had kept up with real recent inflation levels – a difference of £1,906. Calls have been coming from every corner of the sector, asking the Government to redress the balance and uprate the loans by actual and historic inflation rates, but the new increase falls far short of making up the deficit.

The student experience has long been associated with a more frugal life – beans on toast and cheap pints come to mind – but the reality is that for many students, it is now a struggle to afford the essentials. For a student eligible for the maximum amount, the £1906 in loan shortfall could have housed them for more than a term, covering almost 4 months’ rent; and last year, research by Russell Group Students’ Unions found that 1 in 4 students regularly missed meals or went without other necessities because they simply couldn’t afford them. In 2023, 3% of students said they were now mostly funding their living costs through a bank loan or overdraft.

When looking at the most socioeconomically disadvantaged groups, the number of students skipping meals rises to 3 in 10, and these are the students most at risk of dropping out. For the sector to make a serious difference in widening access to university – something that’s incredibly important to Russell Group universities – we need to be confident that these students will get the financial support they need to come to university and be confident they can afford their living costs, leaving them able to focus on their studies and thrive.

Universities are doing what they can to plug the gap, despite finances already being under pressure, but a combined effort from the Government and the sector is needed for students to succeed. Our analysis reveals that together, Russell Group universities spent tens of millions of pounds last year from their existing budgets to support students, including specific support for under-represented groups.

From direct financial aid in the form of bursaries and hardship funding, to non-financial support including food banks and pantries, subsidised meals and transport, on-campus jobs and trained money advisors, universities are getting creative with the support they offer. For example, LSE offers a rent guarantor scheme, supporting low-income students whose families might not be in a position to act as guarantors. Many Russell Group universities are also working with their Students’ Unions, like Queen’s University Belfast whose free food pantry was accessed over 5,000 times between September and November 2023.

One largely unaddressed area where student support is being squeezed is the freeze on parental earnings thresholds, the means-tested basis that determines how much maintenance loan a student receives. Currently, to receive the maximum amount, students must have parental household earnings of under £25,000 – but this figure has been frozen in cash terms since 2008.  If this threshold had increased in line with average earnings, it would now sit at £35,000, opening up the maximum support to thousands more students.

Currently over half of students feel their financial situation has a negative effect on their studies, and once again, students who are already the most disadvantaged are the worst affected: research from HEPI shows that 29% of students from POLAR4 Quintiles 1 and 2 feel the impact on their studies. The UK puts great emphasis on the power of education to open doors, solve societal challenges and transform lives; but the education of many young people, through no fault of their own, is now suffering as they try to make ends meet. HEPI and AdvanceHE’s 2023 Student Academic Experience survey revealed that over 50% of students now work part-time as the cost of living rises, diminishing their available time for studying and valuable extra-curricular activities.

As loans are calculated on parental household income, there is an unspoken assumption that the gap in living costs is typically covered by the Bank of Mum and Dad. In HEPI’s student survey, 31% of students said their living costs were mostly covered by family support, although the number relying on paid work had risen to 14%. With the thresholds frozen for more than 15 years, many families cannot access the maximum Government support, but also can’t top up the loan with their own money. A Government commitment to reviewing and ultimately changing these thresholds would be an effective investment in future equality.

This week’s maintenance loan uprate was a missed opportunity to redress the balance of recent years and put student support back on track. Students are the future for the UK, but remain a significant and overlooked casualty of recent cost-of-living pressures. It’s vital that young, diverse talent isn’t shut out by financial barriers – and as our universities continue to do what they can, the Government must step up with us. 

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1 comment

  1. Albert Wright says:

    “Students are the future for the UK, but remain a significant and overlooked casualty of recent cost-of-living pressures.”

    This is definitely true but this applies to students of all ages, not just those over 18.

    The current UK economic situation of higher interest rates, higher taxes and higher prices adversely affects millions of people.

    For those in receipt of money from the Government / taxpayers, the freezing of thresholds has been the major cause of severe and growing poverty for those who already were the most impoverished.

    We need a National Campaign (lead by Universities) to pressure the Goverment to Unfreeze Thresholds.

    Alongside this, more should be done by Universities to reduce the cost of delivering undergraduate degrees through greater use of modern technology – i.e we need increased efficiency and productivity.

    Perhaps too, we need to rethink the model whereby British students (unlike other countries) have the expectation of studying away from home and getting maintenance loans.

    It would be unfortunate for Russell Group members, many of which are located in popular cities, to change the rules so that students who attend local Universities were given higher maintenance loans than those who wish to study further away from home. It could definitely reduce costs and make better use of national assets.

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