Hundreds of thousands of students have received their A-Level grades having navigated another year of educational disruption thanks to COVID-19-related government policy. Liz Emerson, IF Co-founder, looks at the numbers and calls for more financial government support for higher education students.
Two-thirds of students make grades
Two-thirds of students will gain entry to their first choice higher education establishment today according to data from the Universities and Colleges Admissions Service (UCAS). This year’s cohort should be particularly congratulated if they hit their grades during yet another year of the COVID-19 pandemic in which their education has been delayed, disrupted or put on hold.
Thanks to the government tightening the grade boundaries, 20,000 students have had to face disappointment because they missed their offers and now do not have a place at university – that’s an increase of 46% on last year’s figures. There is an obvious intra-generational unfairness taking place if this year’s students have been dealt with more harshly than their 2020 or 2021 counterparts. UCAS has stated that there are more places available than students this year so hopefully most students will still be able to find an appropriate course.
Student cost-of-living crisis
Every household, whatever their age, is being hit by the cost-of-living crisis. Just this week the Office for National Statistics (ONS) announced that inflation has passed 10.1%, which means that everything we purchase is getting more expensive – from food and fuel, to energy and rents. Students will be harder hit because student maintenance loans have failed to rise by inflation for close to a decade, so while these loans will rise by 2.3 percent in the next academic year, that rise will do very little to help current and future students cover their living costs.
Student maintenance loans are also means-tested because there is a government expectation that parents, rather than the taxpayer, should contribute to their student children’s living costs. The problem is that if parents are feeling the inflation squeeze as well they are less likely to be in a position to cover the gap between maintenance loans given and actual living costs. Add a likely recession and student part-time jobs will become harder to come by.
Housing costs up 14%
Average rents went up 14% between January 2015 and July 2022 according to the ONS Index of Private Housing Rental Prices, which is likely to place even more pressure on student finances. Well before the pandemic, student housing costs ate up 90% of student annual maintenance loans.
A June 2022 National Union of Student survey has revealed that 96% of students are cutting back on spending as the price of student accommodation, gas, and food has increased in the last six months.
The energy crisis is likely to see energy bills for the average household pass £4,000 a year, placing an even higher financial pressure on students, with experts fearing that it will increase hidden homelessness among students who can no longer afford their bills and end up sofa-surfing, or worse.
Mental ill health
In Scotland, two-thirds of students worried or stressed about their finances “frequently” or “a lot of the time” according to February 2022 figures published by NUS Scotland. One-third of those surveyed also contemplated dropping out. While a £3 million government cash injection into student mental health services is welcome, that figure is simply not high enough to deal with the juggernaut of mental health concerns likely to arise through financial precarity.
Pity those who defer
On the face of it, the decision to defer until 2023 would seem like a sensible option during a cost-of-living crisis. However, students who commence their courses in September 2023 face a nasty shock because the student finance system is changing from a 30-year student repayment loan-term to 40 years.
Those students will face another 10 years of student repayment rates of 9% of income over the threshold of repayment, currently set at just over £27,000 but set to be reduced to £25,000 from next year. For a fuller explanation of the changes to student loans read this article from June.
Successive government’s treatment of students, compared to other generations, smacks of intergenerational unfairness. Not only did older generations get their higher education for free, but they also received free money from the government to cover their living costs in the form of “grants”.
The graduate pay premium they received was fed back into the taxation system through higher taxation on their earnings. The graduate premium hardly exists today, except for a small number of courses, yet today’s students are expected to feed back 9% of their earnings over a set threshold for most of their working lives, on top of tax paid in our progressive tax system.
Today’s students face double taxation with 42.25% marginal tax rates. This excellent report by Professor Kevin Albertson explains how a fairer student finance system could work. After everything that the young gave up to protect older generations during the pandemic, the very least the government could do is increase student maintenance loans.
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