Cost of living boost for students
Students in need are to benefit from additional financial support designed toease cost of living pressures and help them to meet everyday costs whilst they are completing their studies.
In recognition of the challenges some students have faced due to the global rise in inflation, the government has announced today (11 January) that it will provide an additional £15 million in hardship funding this financial year so that universities can provide extra support to students that need it most.
It builds on the significant £261 million that the government has already provided to the Office for Students (OfS) for the 2022/23 academic year which universities can draw upon to boost their own hardship funds.
Universities are responsible for ensuring students who need help get the support they need, including through their own hardship funds, or through bursaries and scholarships. Many universities have stepped up their efforts this year offering innovative schemes to support their students. Examples include:
- The University of Southampton which has made a total of £1.1 million in the current academic year available to students to cover emergency costs,
- Queen Mary University of London which has a bursary scheme automatically provided to any domestic undergraduate from a family whose annual taxable income is below £20,000, and
- The University of York which announced that £150 would be given to student households who are finding it difficult to pay their bills as part of a £6 million package to support students most in need.
The government has also confirmed today that loans and grants to support undergraduate and postgraduate students with living and other costs will be increased by 2.8% for the 2023/24 academic year.
Minister for Skills, Apprenticeships and Higher Education Robert Halfon said:
“University is an investment, setting students up for future success, helping them to climb the ladder of opportunity and gain invaluable skills for the world of work.
“We recognise students continue to face financial challenges, which is why we are increasing loans and grants for living and other costs for a further year. For the sixth year in a row, we have frozen tuition fees for a full-time undergraduate course at a maximum of £9,250 which will reduce the initial amount of debt students will take on.
“To support universities to top up their own hardship funds we are also making an additional £15 million available. This will bring the total available to universities to draw on in supporting their students in hardship to £276 million this academic year.
“I’m really pleased to see that so many universities are already stepping up efforts to support their students through a variety of programmes. These schemes have already helped students up and down the country and I urge anyone who is worried about their circumstances to speak to their university.”
For the sixth year in a row, the government has confirmed it will freeze tuition fees for a standard full-time course in the 2023/24 and 2024/25 academic year in England at a maximum of £9,250. This move will help provide better value for students by reducing the initial amount of debt students will take on.
The government regularly monitors the interest rates set on student loans against the interest rates prevailing on the market (PMR) for comparable loans. The government confirmed that the maximum Plan 2 and the Postgraduate loan interest rate will be 6.5% between 1 December 2022 and 28 February 2023.
From the 2023/24 academic year, the government will cut interest rates for new students to RPI only so that, under these terms, graduates will not repay more than they originally borrowed, when adjusted for inflation.
Sector Response
NUS Vice President for Higher Education, Chloe Field, said:
“The government has finally recognised that the cost-of-living crisis is leaving our student communities on the brink, and that existing support has failed to reach them. That we have got here at all is down to the hard work and relentless campaigning of the student movement over the past six months.”
“We welcome this investment of £15 million into university hardship funds. It’s vital that these funds are made accessible to as many students as soon as possible. Ultimately, hardship funds are a quick fix to a long-term problem which has come to a head in the cost of living crisis.
The government must go further to protect students in the long term, by increasing the value of the maintenance package, implementing a rent freeze and further controls on spiralling student rent, reducing transport costs and increasing the minimum wage for apprentices and young people.
“The 2.8% increase in the maintenance loan for 2023/24 is woefully inadequate and will leave students over £1,500 worse off than they would have been if student support was tied to inflation. More than a quarter of students are living on less than £50 a month after rent and bills. If maintenance support continues to lag behind inflation, the number of students in poverty is only going to increase.”
Vivienne Stern MBE, Chief Executive of Universities UK, said:
“We welcome the government’s decision to increase hardship funding for the higher education sector. These are difficult times for students, especially those from low-income backgrounds, with caring responsibilities or estranged from families. Throughout this cost-of-living crisis, our members have stepped up to provide support to students, from daily meal deals to increasing hardship funding, universities are working hard to offer much needed help to students. This extra funding from the government will help to shore up their efforts.
The Government has also announced plans to award an uplift in the maintenance loan. Although it’s an increase, it does not make up for the real terms cut to maintenance that students have experienced since inflation began to rapidly increase. We need to look more closely at how well the current system is supporting students and what changes need to be made, currently the student maintenance package in England is at its lowest value in seven years. Students are also eligible for much lower maintenance loans than when the system was designed, as the parental earnings threshold has been frozen since 2008.
While frozen tuition fees will reduce initial student debt, the £9,250 fee is currently only worth £6,600 to universities. High inflation will reduce this value further, this is why we need a national conversation on how universities are funded.”
Ben Waltmann, Senior Research Economist at the Institute for Fiscal Studies, said:
“The most important part of today’s announcement is that the government has allowed the large cuts to student support since 2020/21 to become baked in. This means that merely due to inflation being higher than forecast, students from the poorest families will be entitled to £1,500 a year less in maintenance loans than if inflation forecasts had been correct.”
Kate Ogden, Senior Research Economist at the Institute for Fiscal Studies, said:
“The government’s framing of this announcement as a ‘cost of living boost for students’ is at best highly misleading. Maintenance loan entitlements will still be much lower in real terms than in 2020/21 in both this and the next academic year. At around £10 per student, the one-off additional hardship funding this year is a drop in the ocean. The continuing freeze in tuition fees, which was already announced in February last year, does not help students with their living costs at all and in fact squeezes the finances of the same universities that the government expects to step up support for students.”
Hayley Pells, Policy Manager at the Institute of the Motor Industry:
“It’s great to see Government recognising the financial hardships being faced by students. But we fear there is a serious misplaced understanding of the financial position of apprentices. Ignoring this group sends another message that they are the poor relations to full-time students and could deter young people from taking this route in the future. With the skills shortage already critical, this is the last thing any sector needs.
“Of course, apprentices are earning while learning. But the reality is that most apprentices are on either the minimum or living wage – and some may even face redundancy or reduced working hours when economic conditions put pressure on employers.
“Now more than ever we need to make workplace learning attractive and there is much the government could do to support employers of apprentices, especially the small and medium sized enterprises which make up such a large proportion of the automotive retail sector.
“For example a skills tax credit could be introduced for SMEs, as proposed by the Learning and Work Institute. SMEs could also benefit from a well-publicised service and central portal of information to help them understand how to take on an apprentice.
“The Super Deduction which is planned to end 31st March 2023 could also be continued to prompt much needed investment in capital equipment required to support the transition to the technologies of a greener transport future. “
- Student renters who pay their energy bills directly to a domestic supplier also benefit from the scheme that discounts £400 from their bill over six months from October.
- The Energy Prices Act passed on 25th October includes the provision to require landlords to pass benefits they receive from energy price support, as appropriate, onto end users. Further details of the requirements under this act are set out in the legislation.
- Students whose bills are included in their rent, including energy charges, will typically have agreed their accommodation costs upfront when signing their contract for the current academic year. Businesses, including those that provide student accommodation, are covered by the Energy Bill Relief Scheme which provides energy bill relief for non-domestic customers in Great Britain.
- The amount borrowed has no impact on monthly repayments for student loans. Monthly repayments will not increase for students if they take out more maintenance loan. Monthly repayments are linked to income, not the amount borrowed.
- A graduate with a plan 2 loan on a salary of £28,000 this financial year, 2022-23, will repay around £5 a month. A graduate with a plan 2 loan on a salary of £30,000 this financial year will repay around £20 a month. And a graduate with a plan 2 loan on a salary of £35,000 this financial year will repay around £58 a month.
Responses