Students ‘£1,500 poorer’ as maintenance loans lag after inflation

Ahead of announcement of maintenance loan rates for 2023-24, Russell Group warns next cohort will likely have to get by on significantly less

January 9, 2023
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Students in England stand to miss out on £1,500 a year each when the value of the maintenance loan for the next academic year is decided this month, the Russell Group has warned.

The level of support given to students to cover their expenses has not risen in line with the skyrocketing cost of living because it is set using inflation forecasts, which have been inaccurate every year since 2020-21.

With just two weeks to go until Ucas’ deadline for applications for university entry in 2023-24, students are still waiting to hear how much the new loans will be worth, with some hopeful that increases will be higher than normal to account for the rapid rise in inflation driven by the pandemic and the war in Ukraine.

But if the Department for Education sticks to its usual methodology of uprating maintenance loans by projections, the amount could increase by only 2.8 per cent, the figure forecast by the government’s Office for Budget Responsibility for what inflation will be in the first quarter of 2024.

The Russell Group said this would mean that a full-time student living away from home outside London would receive £9,978. But if the loan had kept pace with inflation over the past three years, that student should be receiving £1,523 more, a total loan of £11,501.

There is no existing mechanism that can correct the loan amount if forecasts turn out to be significantly wrong, but the Russell Group called for a larger uplift this year so the loan would reflect actual inflation since 2020-21.

“This change should be made in-year, ensuring swift support for students who might be struggling and ensuring loans keep up with costs,” the group – which represents 24 research-intensive universities – said in a statement.

Tim Bradshaw, chief executive of the Russell Group, said universities were “doing what they can” to help students with the cost of living but remain concerned about how financial difficulties might affect their well-being and studies.

“It’s particularly frustrating to see those challenges exacerbated by the use of a model that means students are set to be £1,500 worse off next year, especially when it can be so easily fixed and it relates to a loan that is paid back by the student,” he added.

“We are calling the DfE to take this opportunity to deliver a fair deal for students and improve the system so it is fairer going forward.”

In the longer term, the body called for further changes to protect against sudden rises in inflation and a review of the parental earnings threshold that determines which students receive the full level of support. This has been frozen at £25,000 since 2008, and the Institute for Fiscal Studies has said it should now be closer to £35,000 if it had risen in line with average earnings.

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