Maintenance loans being in line with inflation predictions means that the poorest students are over £1,000 worse off. Students now face hardship over the winter months with the rising cost of living crisis and student finance loans that can’t keep up.
Students this academic year will be financially worse off compared to previous years, the IFS finds. The poorest students in England will be up to £125 down each month due to the way maintenance loans are calculated.
How Are Maintenance Loans Calculated?
For English students, maintenance loans are calculated in line with how much your household income is. This means that students whose parents or partners earn less will benefit from a higher maintenance loan.
However, the amount student finance offer as a maintenance loan tends to change each year. For the new academic year, student finance adjust the loan to be in line with the predicted inflation rise. This is only ever the predicted amount. This year, inflation has increasingly risen due to the cost of living crisis.
The IFS Are Calling For More To Be Done To Support Students
The IFS, or the Institute for Fiscal Studies, is blaming the errors made in the inflation predictions for why students are suffering much harder financially.
“If forecasts had been accurate, maintenance loan entitlements would have kept rising over the last two years. Students from the poorest families studying outside London and living away from home would now be entitled to £11,190 in living cost support – around £1,500 more than they are actually receiving.
“Put differently, these students are £125 per month out of pocket merely because of errors in inflation forecasts.”
The institute warns that this will not only affect students this year but also in years to come.
“There is no mechanism in place for these cuts ever to be undone, as past forecast errors are not considered when the adjustment in entitlements for the following year is determined. This means that – unless and until policy changes – any cuts will stay in place.”
This data shows that the out-of-date system is detrimental to students when they get it wrong. The report blames the government for forgetting about students during the cost of living crisis.
“Many students are falling through the cracks in the government’s ‘cost of living’ support package. They are typically not eligible for benefits, and so are not entitled to targeted payments for those on low incomes.”
Universities’ hardship funds aren’t enough to help students struggling the most. This report and others show that students should not be forgotten at this most crucial time. The concern is that, due to a lack of support and funding, young people will choose not to go to university.
“A 21-year-old student could earn nearly £1,200 more working in a minimum wage job this academic year than they will receive in maintenance support. This gap is set to increase to more than £2,000 next academic year – the biggest gap since the national minimum wage was introduced in 1999.”
The ONS Found Half Of Students Are In Financial Hardship
The Office of National Statistics found that half of the students were reporting to be in financial hardship, with 91 per cent worried about the rising cost of living.
Almost 80 per cent said that they were concerned that the cost of living may affect their studies. Almost a third went on to say that had missed non-mandatory lessons to save on the costs.
With most students paying over £9,000 a year to attend university, some can’t afford what is being asked of them.
Half of the students felt that they were in financial difficulty. This is before most of them are facing the adult world properly. A quarter of them then reported that they had taken on new debt to try and tackle their financial hardship. This only adds to the tens of thousands of debt they’ll owe after their education.
