The government has announced that maintenance grants will be introduced for university starters from the 2028–29 academic year. IF Senior Researcher, Toby Whelton, examines whether these grants will be enough to fix the broken system of student support.
Maintenance grants to be reintroduced
Last year, the government released the Post-16 Education and Skills White Paper, which contained the flagship announcement that maintenance grants would be reintroduced.
On the surface, this was cause for celebration. The removal of the maintenance grant in 2016 was an affront to intergenerational fairness. Only years after tripling tuition fees, vital support was pulled from under the feet of the most disadvantaged students. Student debt spiked as grants were replaced with higher loans.
In retrospect, the removal of grants signaled the gradual decline of student support that has led to the current crisis facing students. Food banks have become entrenched on campuses. Students are having to work excessive hours at part-time jobs just to make ends meet. Meanwhile, poorer prospective students are being put off university altogether due to fears over affordability.
Will the reintroduction of maintenance grants be enough to fix the broken system of student support?
The devil is in the details
New maintenance grants will look very different from their previous iteration.
The maximum grant will be worth £1,000 a year and taper down to £500 for the minimum grant. After two years of study, the grant will be reduced to £750 for the maximum and a minimum of £375 for subsequent years.
The grants will not affect maintenance loan entitlements. It will be a top-up that raises the students’ total income. They will come into force in the 2028–29 academic year and students who have begun their course before this date will still be eligible.
Who is eligible?
The maximum grant will apply to households with an annual income of £25,000 or below and taper down to the minimum allowance at £30,000. Beyond that, students will not be eligible. This will create a severe cliff edge, whereby two families in effectively identical circumstances either receive a partial grant or nothing.
Where things become less clear is that, in addition to the means-testing criteria, grants will be restricted to particular courses. We are yet to have a set list of degrees, but it was announced that it will be subjects that “support the government’s missions and the Industrial Strategy”.
What does this mean in practice?
Data from 2022−23 shows that 51% of students would have qualified for the full grant due to having a household income below £25,000. By 2028−29, inflation and earnings growth will drag some families over this threshold, so the percentage will likely be closer to 47%.
Once we account for the subject-criteria, the numbers seriously dwindle. While the list of applicable courses is unconfirmed, the government has suggested aligning it with the current subject-list for the Lifelong Learning Entitlement (LLE). The IFS estimates that 30% of current undergraduates are enrolled on courses that receive LLE funding.
This would mean that students who meet both the means-testing and subject criteria for the maximum grant would account for a measly 10% of undergraduates. An almost negligible figure.
The good ol’ days
You don’t need to look far back to see a more generous maintenance grant policy. Even ten years ago, the value of support in England was far greater and far more accessible.
The maximum grant in 2016 was worth £3,390 (£4,710 in today’s money) and available to all students regardless of subject. The parental earnings threshold to qualify for the max grant was the same as the new system at £25,000, but that is equivalent to £34,750 once adjusted for inflation. There was also a far more gradual taper that meant students with a household income of £42,600 (£59,000 in today’s money) were still eligible for a partial grant.
As a result, 43% of students had access to maximum grants and a further 14% received partial grants. Unlike the new grants, pre-2016 grants were not reduced with subsequent years of study.
New maintenance grants will be worth less than a quarter of the pre-2016 grants and will only be available to a fifth of the students. Simply put, the new system is over twenty times less generous.
The cost-of-learning crisis
The policy becomes even more pitiful when placed in the broader context of the declining student support.
Maintenance loans, in theory, have been uprated in line with inflation over the last decade. But in reality, this has not been the case.
Firstly, maintenance loans are uprated by a forecast of inflation, not actual figures. In recent years, inflation has been consistently under-forecast meaning loans have been uprated by less than they should have. This has meant loans are now worth £1,500 less in real terms due to an uncorrected technical fault in the system.
Secondly, while the loan value has been uprated, the eligibility threshold set at £25,000 has not changed since 2008. This amounts to an effective decrease to the threshold of £16,000. This means that even if a household’s income has not increased in real terms, they will be eligible for a far smaller loan compared to ten years ago. To put this into perspective, a single-parent household working full-time on minimum wage is no longer eligible for the maximum loan. This has slashed thousands of pounds from maintenance loan entitlements for millions of families.
Thirdly, last year’s Budget revealed a further stealth reduction in student support buried in the supporting documentation. Before, measures of household income would account for the number of children currently in Higher Education and increase their loan entitlement if multiple dependents were at university. This concession has now been removed, affecting larger families, who statistically are already far more likely to be in poverty and less able to support their children through university.
In summary, even for the few that will benefit from the new maintenance grants, it will be a world away from offsetting the past erosion of student support.
Anywhere but England
Even within the UK’s current fiscal constraints, a fairer system of student support is possible. Scotland, Wales and Northern Ireland all have retained maintenance grants that resemble the pre-abolition English system.
Moreover, the 2015−16 system of student support was under the same student finance system we have today. The IFS has recently revealed that the government is set to make a profit of £800 million on student loans given out for 2022−23 graduates. The idea that we cannot invest more in student support is both a political choice and absurd.
Exploiting student poverty
The new maintenance grant is an insult to students. It will not fix the fact that the poorest students will graduate with the most debt (those who qualify for maintenance grants will, on average, take out £12,400 more in student debt than those ineligible). The policy neither offsets past reductions in student support, nor meaningfully addresses soaring levels of student poverty.
But above all, there is an issue of principles. Making grants contingent on the subject studied is, in effect, weaponising student poverty. It is also likely to be an ineffective incentive, given that the choice of degree is often limited by the A-Levels studied.
All students should be afforded a minimum standard of living, regardless of their subject. If the government is making a tacit admission that some degrees are more valuable than others, then perhaps some degrees should, at the very least, be cheaper than others.