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Implementing a Minimum Income Standard for students

  • 24 May 2024
  • HEPI, with support from the higher education software company TechnologyOne, hosted a roundtable dinner to discuss the recent report on the financial support students need to engage fully in university life. This blog considers some of the themes that emerged from the discussion

Forty years ago, a student at university in the UK paid no tuition fees, could receive a full maintenance grant and rarely felt in need of a paid job while studying. 

By contrast, many of today’s students are under increasing financial strain. The 2023 HEPI/Advance HE Student Academic Experience Survey found that a majority of students (55%) now do paid work during term time, while other HEPI research has shown that more than a quarter of universities operate a food bank to support students struggling in the cost-of-living crisis. Since 2016, the real value of maintenance support has fallen by 7% in England, 10% in Scotland and 3% in Northern Ireland and has risen only in Wales – by 2%. 

What such financial challenges mean for students and how to respond was the subject of a recent roundtable dinner hosted by HEPI with TechnologyOne, a software company providing SaaS solutions to higher education. 

Minimum Income Standards

The discussion drew on a report commissioned by TechnologyOne and carried out by the Centre for Research in Social Policy at Loughborough University. Using focus groups and economic analysis, this sought to identify a Minimum Income Standard (MIS) for students. It puts figures on how much money they need not just for clothes, food and rent but for full participation in university life, and how this compares to the amount available to them. 

The report calculates that, including rent, students need £18,632 a year outside London and £21,774 a year in London to meet MIS. 

For students from England studying outside London, this is a gap of £8,405 with the maximum maintenance support available, while for those studying in London, the gap is £8,426. For students from Northern Ireland, the gap whether studying in London or outside is well over £10,000. 

Modest needs 

Matt Padley, co-director of the Centre for Research into Social Policy, who carried out the study and has done similar studies identifying MIS for pensioners and families, told the roundtable that the discussions held with students about their needs were strikingly similar to those held with other groups. 

Far from backing up common stereotypes about hedonistic student life, they identified needs that were modest – £20 a year to personalise their space, money to buy a share in a TV that they could watch with the rest of their household, enough to join a student club or attend the annual university ball. 

The report also calculates the number of hours per week that a student would need to work to reach MIS. On the minimum wage, this ranges from 14 and a half hours for a student from Wales to more than 23 hours for a student from Northern Ireland. 

It also looks at parental contribution. The parental contribution needed for a student to reach MIS without any paid employment works out at around £5,900 for families in Wales from all income levels and £13,865 for families from England with the highest household incomes, eligible for the minimum maintenance loan. 

In terms of policy recommendations, the report suggests that students should be expected to work around ten hours a week and that parents should not be expected to contribute if they have not reached MIS themselves. 

Life beyond studying 

Participants in the roundtable welcomed the recognition that university is not just about studying. 

One speaker said: “In opening up university to a much wider group of students we have to support them to take advantage of what university is.” This was not just a matter of fairness but was about attending to students’ mental health by ensuring that they “aren’t just working all the time or sitting alone in their bedrooms worrying about money”. 

It was also felt that the report provided essential information to put to policymakers who are making decisions about student maintenance – as well as to potential philanthropists interested in finding out what the gaps in existing support are so that they can help fill them. 

Meanwhile, it would prove a useful starting point for discussions with students and their parents preparing for university about exactly the costs involved. The assumption that all students arrive with laptops and the latest iPhone is often wrong, said one speaker, and some find themselves at a disadvantage from the start. 

Scary numbers 

But the roundtable also agreed that the high numbers the report identified were “scary”, which policymakers could find off-putting. 

Some suggested that the numbers are not scary enough, since for some students the gap between what they needed and what support was available was far larger. Many were working longer hours in study and paid work than an employer would be allowed to demand, while others found the paid work they needed hard to come by, with a few struggling to feed themselves. 

Some participants felt that more emphasis on degree apprenticeships and more flexible ways of delivering higher education that made it easier to combine study and paid work could be the answer, although it was pointed out that the average salary of a degree apprentice may not be enough to reach a minimum income standard either. Nor would more emphasis on flexible study help those training to be a teacher or NHS worker who had to complete a certain number of training hours as part of their course. 

While all agreed that the report was a useful basis on which to make demands of policymakers about student support, they felt questions remained about what those demands should be – especially when there was little money around and when schools and hospitals would be the priority. 

One speaker suggested that the report was difficult for the sector: “Universities are asking for more money but this report is saying we shouldn’t; we should ask for more money for students.” 

Who pays? 

But most agreed that filling the income gaps identified should not all be down to taxpayers. Some of the money should come from students and their parents and employers may also need to make a contribution. An important question posed was whether the contributions should differ for certain student groups and what criteria should be used. 

One suggestion was a citizens jury method of decision-making, asking a selection of the general public to help decide the future direction of higher education finances. 

The roundtable also considered what the cost would be of failing to meet the MIS gap. It was pointed out that every year around 20 per cent of students from the most disadvantaged groups drop out – at a cost of around £250 million in fees and maintenance loans that have not led to a qualification – and that outcome gaps between different income groups are growing. 

One speaker suggested that failure to meet a minimum income standard for students could have knock-on effects on quality and outcomes generally in the sector. It was no good having a high-quality course if students were not supported to engage with it. Another suggested that it could affect numbers going on to postgraduate taught courses. 

With a new government predicted after a general election this year, participants in the roundtable agreed that now was the time to approach policymakers about the shortfalls the report identifies. Even if they found the figures difficult, it would at least make them think about students’ needs, which was particularly important for achieving equity between the generations. 

Padley said that university should be seen as an investment not only for individuals but for society. It was important to have a conversation about the different contributions to be made by parents, the public, employers and higher education institutions to help young people make the most of themselves and the country, he said, since “they are the future”. 

TechnologyOne’s Executive Vice President in the UK, Leo Hanna concluded:

Compared to my university days, today’s students are faced with much more complex issues. Balancing studies with financial realities is no easy task. Our own data shows that seven out of ten UK students have contemplated dropping out due to the rising cost of living. Clearly, the current financial support falls short, leaving students struggling to maintain a satisfactory standard of living, and it’s impacting them academically.

We know that investing in smart technology and analysing the right timely data can be transformative in helping universities identify and intervene when students are struggling academically, financially and emotionally, and ultimately helping them stay the course. But that is only one part of the puzzle and this report and its recommendation provide a brilliant roadmap for policymakers.

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