‘Disappointing’ maintenance loan uplift a ‘real-terms cut’

Westminster government criticised by sector over 2.8 per cent uplift as concern mounts over impact of cost-of-living crisis on students

January 11, 2023

The Westminster government has announced an increase in hardship funding for students amid the cost-of-living crisis along with a 2.8 per cent uplift in maintenance loans, but the sector has warned that the latter is “disappointing” and amounts to a real-terms cut at a time of high inflation.

The government will provide an additional £15 million in hardship funding this financial year to help English universities provide extra support for students, building on £261 million already provided to the Office for Students for institutions’ hardship allocations.

The Department for Education also said it will increase maintenance loans for undergraduate and postgraduate students by 2.8 per cent for the 2023-24 academic year – well below the latest figures on the consumer price index rate of inflation, which stood at 10.7 per cent in November.

It also confirmed that the freeze in tuition fees at English universities would continue up to and including the 2024-25 academic year, a freeze that universities warn is severely eroding their funding.

Robert Halfon, minister for skills, apprenticeships and higher education, said: “We recognise students continue to face financial challenges, which is why we are increasing loans and grants for living and other costs for a further year. For the sixth year in a row, we have frozen tuition fees for a full-time undergraduate course at a maximum of £9,250, which will reduce the initial amount of debt students will take on.”

Vivienne Stern, the Universities UK chief executive, welcomed the additional hardship funding but said the maintenance uplift “does not make up for the real-terms cut to maintenance that students have experienced since inflation began to rapidly increase. We need to look more closely at how well the current system is supporting students and what changes need to be made; currently the student maintenance package in England is at its lowest value in seven years.

“Students are also eligible for much lower maintenance loans than when the system was designed, as the parental earnings threshold has been frozen since 2008.”

On frozen fee caps, she said that high inflation “will reduce this value further” and “this is why we need a national conversation on how universities are funded”.

Tim Bradshaw, the Russell Group chief executive, said: “It is disappointing that the DfE has failed to deliver a meaningful increase to maintenance loans or taken the opportunity to address some of the flaws in the forecasting process to ensure they keep up with rising costs, despite warnings that students would be left £1,500 worse off next year. Reversing the real-terms cut in the value of the loan since 2020-21 would be a simple fix that would provide much needed immediate support for living costs and would be paid back by the student.”

He warned that without additional government assistance, there was concern that financial pressures on students “will have an increasing impact on students’ studies and wider mental health and well-being”.

Rachel Hewitt, the MillionPlus chief executive, said the government “needed to go further to make any real inroads on this issue. The government’s 2.8 per cent uplift in maintenance loans equates to a significant real-terms cut in student support. Universities will continue to support their students through the cost-of-living crisis, but with their budgets also stretched they can only do so much.”

The Institute for Fiscal Studies said the “big news” was “what has not been announced”, in terms of the government not “correcting large cuts to maintenance loan entitlements due to forecast errors [on inflation] made over the past two years, and it is also not putting in place a mechanism to correct forecast errors in the future. This means that students from the poorest families will in the future be around £1,500 worse off per year than they would have been if inflation forecasts over the past two years had been correct.”

Kate Ogden, senior research economist at the IFS, said: “The government’s framing of this announcement as a ‘cost of living boost for students’ is at best highly misleading. Maintenance loan entitlements will still be much lower in real terms than in 2020-21 in both this and the next academic year. At around £10 per student, the one-off additional hardship funding this year is a drop in the ocean. The continuing freeze in tuition fees, which was already announced in February last year, does not help students with their living costs at all and in fact squeezes the finances of the same universities that the government expects to step up support for students.”


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