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Making better decisions on student financial support

  • 29 January 2025
  • By Peter Gray

By Peter Gray, Chief Executive and Chair of the JS Group.

As the higher education sector starts to plan its next budget cycle and many may need to make savings, there is a concern about the impact of any cuts on students and how this could negatively affect their university experience and performance.

Universities are bound to look at a range of options to save money, especially given the stormy operating context. But one less-often highlighted aspect of university finances is the cost (and benefit) of the additional financial support universities devote to many of their students. Through cash, vouchers and other means, many universities provide financial help to support with the costs of living and learning.

Using Universities UK’s annual sector figures as one indicator, roughly 5% of universities’ overall expenditure has gone towards financial support and outreach, equivalent to around £2.5 billion. Although some of this money will inevitably not go directly to students themselves, this is still a significant amount of spending.

There are, naturally, competing tensions when it comes to considering any changes to targeted financial support. With significant financial pressures on students, exacerbated by the cost-of-living crisis, there is always a very justifiable case for more money. However, with the significant financial pressures universities are facing, there is an equally justifiable case to control costs to ensure financial sustainability. Every university has to manage this tension and trade-offs are inevitable when understanding just how much financial support to give and to whom.

In many respects, the answers to those questions are partially governed by Access & Participation Plans, with the clear intention that these financial interventions really change student outcomes. However, properly measuring those outcomes is incredibly difficult without a much deeper understanding of student ‘need’ – and understanding these needs comes from being able to identify student spending behaviour (and often doing this in real-time).

It always amazes me that some APPs will state that financial support ‘has had a positive impact on retention’ and some quite the opposite and I think part of this is a result of positioning financial support from the university end of the telescope rather than the student end.

Understanding real and actual ‘need’ helps to change this. Knowing perhaps that certain groups (for example Asylum Seekers or Gypsy, Roma, Traveller, Showman and Boater students) across the sector will have similar needs would be helpful and data really help here. Having, using, and sharing data will allow us to draw a bigger picture and better signpost to where interventions are most effectively deployed so those particular groups of students who need support are achieving the right outcomes.

Technology is at hand to help: Open Banking (for example) is an incredible tool that not only can transform how financial support can be delivered but also helps to build an understanding of student behaviour.

Lifting the bonnet and understanding behaviour poses additional questions, such as: When is the right time to give that support? And what form should that support take?

I am a big proponent of providing financial support as soon as a student starts. When I talk to universities, however, it is clear that the data needed to identify particular groups of students are not readily available at the point of entry and students’ needs are not met. Giving a student financial support in December, when they needed it in September, is not delivering at the point of student need, it is delivering at the point where the university can identify the student. I think there is a growing body of evidence that suggests the large drop off in students between September and December is, in part, because of this.

Some universities in the sector give a small amount of support to all students at the start of the year, knowing that by doing so they will ensure that they can meet the immediate needs of some students. But clearly, some money must also go to those who do not necessarily need it.

However, and this is where the maths comes in, if the impact of that investment keeps more students in need at university, then I would argue that investment is worth the return. And the maths is simple: it really doesn’t take many additional students to stay to have a profoundly positive impact on university finances. Thus it is certainly worthy of consideration.

To me, this is about using financial support to drive the ultimate goal of improving student outcomes, especially the retention of students between September and December, which is when the first return is made, where the largest withdrawal is seen and where the least amount of financial support is given.

As to the nature or format of support: of course, in most cases, it is easier to provide cash. However, again, this is about your investment in your student, and, for example, if you have students on a course with higher material and resource costs, or students who are commuting, then there is an argument to consider more in-kind support and using data to support that decision.

Again, I am a proponent of not just saying ‘one size fits all’. Understanding student need is complex, but solutions are out there. It is important to work together to identify patterns of real student need and understand the benefits of doing so.

My knowledge draws on JS Group’s data, based on the direct use of £40 million of specialist student financial support to more than 160,000 students across 30 UK universities in the last full academic cycle.

I have also looked at the student views on such funding and there is an emerging picture that connects student financial support with continuation, participation and progress. A summary of student feedback is here: https://jsgroup.co.uk/news-and-views/news/student-feedback-report-january-2025/

The real positive of this is that everyone wants the same goal: for fewer students to withdraw from their courses and for those students to thrive at university and be successful. We need to widen the debate on how financial support is delivered, when, and in what format to draw together a better collective understanding of student need and behaviour to achieve that goal.

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