How the cost-of-living crisis is transforming the university landscape

Now in its fourth year, Blackbullion’s 2024 Student Money & Wellbeing Report has revealed a new university landscape. One where sustained high living costs – as a new normal – reshape every area of the university experience, from academic attainment to mental health, physical health, and social connection.

In this article, Blakbullion’s founder and CEO, Vivi Friedgut explores the new findings and where this leaves UK universities.

When we commissioned our annual Student Money & Wellbeing research last year, the UK was at the apex of the cost-of-living crisis. As we looked to understand the true cost of university, we found there to be an unravelling happening in all areas of students’ lives.

12 months on, our 2024 Student Money & Wellbeing Report found a new landscape; one where students living with sustained high costs is simply the ‘new normal’. A new normal reshaping every area of the university experience, from academic attainment to mental health, physical health, and social connection.

The fragmented campus

A key finding from our 2024 report is how the cost-of-living is driving fragmentation within the university landscape, as seen by the increasing numbers of ‘commuter students’. Of the 1,200 UK students surveyed for our Student Money & Wellbeing Report, 46% of students classify themselves as ‘commuter students’. Within this figure, 20% of students say they have stayed at home to study due to necessity, rather than choice.

Looking specifically at finances, we found that just 3% of today’s students feel they have enough money to complete their degree; so where does this leave 97% of UK students?  

On average, students told us that they need £621 extra each month to feel that they can confidently complete their degree. This is a 13% increase on last year’s budget shortfall of £548 and 89% higher than Blackbullion’s first Student Money & Wellbeing Report in 2021. What these figures suggest to us is that in 2024, extreme financial pressure is part of the university experience on a larger scale than ever before.

When we looked deeper into the survey, we found that commuter students are particularly hard hit, with 70% of commuter students working alongside their studies, compared to a national average of 63%. At the same time, despite living at home, this group of students report a larger financial monthly shortfall of £671.

The true cost of university education

As with previous years, we wanted to look at the true cost of university education from a financial, wellbeing and social perspective. This year, 85% of our respondents told us they are worried about their finances – a small drop on 2023’s 87% peak, but still significantly higher than the 75% in 2021 and 2022.

If we look further into this cohort, 54% of those who worry about money say this negatively impacts their mental health:

• 93% say worrying about money regularly or sometimes triggers stress
• 77% say they feel hopeless
• 72% report feeling isolated – an increase on last year’s 68%

Once again, we found the commuter student community deeply affected. 61% of students commuting due to necessity rather than choice said worrying about money negatively affects their mental health, compared to the 54% average.

Campus access and academic attainment

What’s the longer-term impact of financial challenges on student outcomes? More than three quarters of UK university students (76%) told us that the enduring cost-of-living crisis might negatively impact their final degree grade. And while 74% of students commuting by choice are very or somewhat worried about the impact of the cost-of-living crisis affecting their academic outcomes, this number rises to 84% for those who commute due to necessity.

Let’s drill further into academic attainment. When we asked students why they achieved a lower grade in an exam or assignment than expected in the past 12 months:

• 59% cited cutting back on going to campus to study independently or use university facilities such as the library (54% in 2023)
• 59% said it was a result of avoiding purchasing books or equipment for their course (56% in 2023)

• 58% cited hours spent working and the same number said cutting back on going to campus to attend lectures or seminars (again, 56% in 2023)
• 57% of students have received a lower grade than expected in the last 12 months due to being too cold to study or concentrate (60% in 2023)

• 56% have received a lower grade because they were too hungry (55% in 2023)

Two-thirds of commuter students (66%) told us they have received a lower grade than expected over the last 12 months because of cutting back on going to campus to study independently or use university facilities. The same figure reported a lower grade due to cutting back on attending lectures or seminars, against a 58% average. Both figures point to a reduced presence of commuter students on campus due to a lack of money.

The widening university experience gap

A clear challenge emerging in our Student Money & Wellbeing Report is the widening gap between student expectations and the reality of their university experience, of which money is a main driver. Over half (54%) of the students surveyed this year said their university experience is either worse or different (neither better nor worse) than expected due to financial pressures. For students who commute due to necessity, this figure rises to 64%.

A final stat is that overall, 1 in 10 UK students regret their decision to go to university. This means 10% of today’s university students believe they made a mistake in attending university – or would have been better off if they hadn’t. So, how can universities use this juncture point as an opportunity to rethink how they engage with students?

Reimagining a new way to support students

Where does this leave students? Today, students (and their parents and guardians) are more dispassionately calculating the return on investment of a university experience. The downward trend in application numbers in the US creeping into the UK shows that the reality of financial challenges and accruing debt is impacting recruitment and retention. How do universities reverse this?

• Creating a genuine ‘student cost of living index’ that empowers prospective students with timely and accurate information would support students with the ability to financially plan for the real cost of university. This will also inform realistic, pragmatic choices about the future.
• Transparent guidance will underpin longer-term recruitment, as well as mitigate financially related non-completion and the inevitable mental health consequences. What we see is, when financial expectations are not aligned with reality, students are more likely to feel a personal sense of failure when they struggle to budget, which in turn further isolates them, exacerbating feelings of hopelessness. The sector must focus on the full spectrum of today’s university experience and present a true picture to prospective students.
• Shifting the UK scholarship culture and putting more money in students’ pockets is a mission for us. We’re working closely with businesses and other organisations, encouraging more and more of them to provide scholarships, bursaries and grants for students via our Funding Hub. This drives inclusion, powers talent pipelines and puts more money in students’ pockets. Many of these come with employment opportunities for the student. We also run National Scholarships Week, which this year is sponsored by Nationwide and supported by the Office for Students. During the week alone, over £500,000 of new scholarships funding will be made available to students.
• Increasing awareness of the help available to all students also remains urgent. If higher education providers can take a whole institution approach, embedding and normalising support everywhere, there is less chance of one team becoming overwhelmed by demand, as well as more opportunities to promote the support available.
• So too does making the process of providing support funds as efficient and sustainable as possible. We are already supporting universities from across our 75+ partners to do this by providing them with the UK’s leading tool for staff to manage and deliver an unlimited number of their university’s funds. Staff are saving significant time using the powerful automation and collaboration tools in our Funds Management System (FMS), while also providing an easier, faster and less stressful experience for students in desperate need – with a guided application process and the ability to deliver secure instant payments in seconds.

Ultimately, this is about giving all students the confidence to make the best decision for their personal situation to maximise opportunities for success. In doing so, we can ensure a connected and positive student experience while increasing student resilience, connection, and mental wellbeing.

By Vivi Friedgut, Blackbullion.