Students’ living cost support drops to lowest value in seven years

The IFS says that, thanks to incorrect inflation forecasts, the value of living cost support for students from the poorest families will fall by £100 per month

The government’s living cost support for HE students from the poorest backgrounds is set to drop to its lowest value in seven years, according to new analysis from the Institute for Fiscal Studies (IFS).

With maintenance loan entitlements failing to keep up with inflation, even those entitled to full maintenance loans will have to make do with more than £1,000 less than they would accrue working in a minimum wage job.

A gross underestimate of the current inflation level will lead to “genuine hardship for students on tight budgets,” according to the author of the briefing, Ben Waltmann, the IFS’ senior research economist.

“Bizarrely, this is happening because student maintenance loan entitlements are routinely adjusted based on outdated inflation forecasts, and forecast errors are never corrected,” he said.

Waltmann predicts that students from the poorest families will lose £1,200 in living cost support in the coming academic year – or £100 per month – compared with what would have been available had the inflation prediction proved correct.

“This makes no sense at all,” he added. “The government should use more up-to-date forecasts and correct for any errors in the following year to avoid permanent cuts. Alternatively, maintenance entitlements could be tied to earnings on the minimum wage, as proposed by the government’s own Augar review.”

We’re in a student cost of living crisis, which is pushing us to the brink – Larissa Kennedy, NUS

The blow will compound a particularly testing time for students from the poorest backgrounds, coming as it does on top of a long-running freeze in the parental earnings thresholds that govern eligibility for means-tested maintenance support.

Had the lower parental earnings threshold been linked to average earnings, it would now be around £35,000. Instead, the level of parental income below which students are eligible for the maximum maintenance loan has been frozen at £25,000 for the last 14 years.

Thanks to inflation, and the likelihood of parental income rising in nominal value but falling in real terms, many students will be eligible for smaller maintenance loans even as their families become less able to support them.


In other news: MPs warn that ‘low student satisfaction and rising deficits spell trouble for higher education in England’


“We’re in a student cost of living crisis, which is pushing us to the brink,” said NUS UK president, Larissa Kennedy, in response the IFS briefing.

“We’re hearing from students who are working three jobs to make ends meet, who can’t even afford to travel to their university library, and who are cutting back on cooking food due to spiralling energy costs.

“Our research has shown that thousands more are relying on foodbanks and buy now, pay later loans.

“Rather than pressing ahead with plans which seek to gatekeep education from marginalised communities and will cost current students and graduates £35 billion over the next five years, the government needs to listen to students, unfreeze the parental earnings threshold and dramatically increase the level of maintenance support on offer for all students.

“Students aren’t cash cows. We are at breaking point, and we’re desperate for something radically different.”

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