Following up last year’s landmark‘Set up to fail: the reality of money management at University’, new research from The Money Charity has found that the serious financial challenge faced by students in 2014/15 has worsened in this academic year. Our new study, Not free at the point of entry: the reality of paying up-front for university’ draws a picture of rent rising faster than loans and grants and a troubling situation faced by students from average-income families who are being forced to ‘pay up front’ for university – or not go at all.
- Average rent has increased by £277 outside London and £174 in the Capital, outstripping the average rise in maintenance of £121.
- Post-rent weekly budgets for students from low income families have fallen between £1 (England, Wales) and £7 (Northern Ireland).
- To keep up with their peers’ average spending, students from average income families will need an extra £2,000 to £3,000 a year.
- Gains from proposals to increase English maintenance loans for 2016-17 by 10% will be entirely eaten up by rent rises by 2019, leaving students worse off than today.
Not free at the point of entry
When describing the plans outlined in the Summer Budget of 2015 to scrap grants and replace them with large maintenance loans, England’s Student Loans Company insists that:
‘University will remain free at the point of entry – no one has to pay up front, and graduates only have to repay their loans when they are earning over £21,000.’
This has never been true for high-income origin students: our research shows that this year families will have to shell out even more than in 2014/15 just to pay the rent, let alone the bills. But Freedom of Information responses outlining university accommodation costs from 143 universities and colleges show that low and middle-income families also have to pay up front, and the situation is getting worse.
Falling student living standards
The median rent for a university room outside London rose by £277, and by £174 in the capital from 2014/15 to 2015/16. Across the four countries in the UK, the average rises in student support were a lower £121, meaning that while the taxpayer is backing larger loans and grants, students from low-income families have post-rent budgets between £1 and £7 smaller each week than a year ago.
Average families paying up front
Average-income families earning between £24,000 and £30,000 in the UK see their children receive £900 less then low-income students. And they will need to find £2,000 to £3,000 a year for the children in order to give them the same spending power as their peers. After rent, if they cannot find this sum, average-income origin students from England and Wales have monthly post-rent budgets of around £300. With this, they have to pay for everything from their course books and phone to food and travel home – about £200 less than the average student in university actually spends.
Given that so much of the pressure to spend for young people is social, many students will inevitably get sucked into debt and money troubles simply to take part fully in student life.
Average families financially excluded from top universities?
On top of these almost unmanageable financial pressures, middle income families face being excluded from many institutions. Nearly half of universities, including those from the leading Russel Group such as Durham, Sheffield and Liverpool, charge more than half of the financial support students get in rent, making them an unrealistic choice for low and middle-income families who may have to choose cheaper, less prestigious places.
Students from all but the wealthiest backgrounds are often left facing the unenviable choice of bearing overwhelming financial pressures at the very start of their journey into financial independence or dropping out of university.
A problem for the taxpayer as well as students
In 2016/17, student grants in England will be scrapped and replaced with loans of up to £8,200 outside London. This is a more than 10% increase in the amount of support available compared to this year. Yet our research shows that by 2019, rent rises will have completely eaten up this extra support, leaving students poorer. Ultimately, the taxpayer backs these loans, many of which will never fully get paid back. If taxpayers are supporting students through university, that is one thing, but if we’re just giving more to landlords each year, it is not just students who suffer from ever-rising rents.
The report ‘Not free at the point of entry: The reality of paying up front for university‘ recommends that Governments and universities work together to ensure that rents do not continue to erode student living standards and pile cost on the taxpayer. Families also need the government to drop the ‘free at the point of entry’ fiction and be clearer about the amount they will end up having to pay up front.
Because we want to help students and families navigate the sometimes difficult financial challenges of university, we are publishing our new Student Money Manual – the essential
guide to student finance and managing your money at university – alongside this research.
Michelle Highman, Chief Executive of The Money Charity said:
“For Students and their families to be told that university is ‘free at the point of entry’ and then face the surprise of ends that simply cannot meet, is unjustifiable. Unless the situation is rectified fast, we will leave lasting problems that undermine a whole generation of students in their journey to a secure and financially capable future.
Ultimately, whether it is by controlled costs or increasing support, students and families must have enough financial support and guidance to make the financial challenge of university a game that can be won.”