Student Updates – Forbes Advisor UK

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12 January: 2.8% Increase Leaves Students Worse Off In Real Terms

The Department of Education has announced that maintenance loans – which support students with living costs – will rise by 2.8% in the 2023/24 academic year, writes Bethany Garner

But with inflation running at 10.7%, higher education professionals have warned students will be worse-off in real terms. 

Vivienne Stern MBE, chief executive of Universities UK, said: “Although it’s an increase, it does not make up for the real terms cut to maintenance that students have experienced since inflation began to rapidly increase.

“Currently, the student maintenance package in England is at its lowest value in seven years.”

According to analysis by student money website Save the Student, the average maintenance loan currently falls £439 short of average living costs each month. 

Faced with stretched budgets, 52% of students have considered dropping out due to money worries, a 2022 survey found (see story below)

As well as increasing maintenance loans, the Department of Education announced tuition fees will be frozen for two years, and an extra £15 million will be added to university hardship funds. 

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.”

Hardship funds are distributed by individual universities, and eligibility criteria are often strict. Grants are only available to undergraduate students who can prove they are experiencing unpredicted financial hardship through no fault of their own.

Many universities, including the University of Southampton, Queen Mary University of London and the University of York, are also introducing their own cost of living support schemes. 


10 January: 52% Of University Students Consider Dropping Out Due To Money Worries

Rising day-to-day costs are prompting more students to consider leaving university before finishing their course, writes Bethany Garner.

According to research from student money website, Save the Student, 52% of students have considered dropping out of their course due to money issues.

Further research by credit management company, Lowell, revealed that more than three-quarters (77%) of students develop personal debt problems at some point during their studies.

Lowell also found that many students relied on credit to make ends meet, with 27% using credit cards, 32% using overdrafts, and 15% using buy now pay later (BNPL) schemes to supplement their income. 

A further 9% said they used payday loans to get by — a form of borrowing that can incur APRs of up to 1,500%.

Less than half (42%) of students who took part in the survey in August last year described themselves as financially supported by family, while 36% had personal savings to use.

The average student is saddled with £2,332 in personal debt – not accounting for tuition fees and student loans – by the time they graduate, found the study, which takes an average of 3.8 years to pay off.

However, some graduates who responded to the survey reported considerably higher levels of personal debt, with 15% saying they left university with additional borrowing worth over £5,000. A further 16% of graduates said it took more than four years to pay off.

John Pears, chief executive at Lowell, said: “University should be an exciting and rewarding experience, but for those young people who move away from home and can’t depend on money from their family, it can also be a costly one.

“Getting into debt while at university can be worrying, especially if you don’t have a regular source of income or a job secured for when you graduate.”


23 November: Half Of Students Report Financial Difficulties, ONS Finds

More than nine in 10 (91%) higher education students say they are somewhat or very worried about the rising cost of living after seeing their costs increase in the past year, writes Bethany Garner.

According to the Office for National Statistics (ONS), which gathered responses from 4,201 higher education students between 24 October and 7 November 2022, 50% of respondents say they are experiencing some degree of financial difficulty. 

A further 15% of students said they are experiencing ‘major’ financial difficulty. 

More than three quarters of students (77%) are concerned that the rising cost of living will impact how well they perform in their studies. With financial concerns on their mind, 45% of respondents said their mental health had worsened since the start of the autumn 2022 term. 

In response to rising costs, 62% of students are spending less on food shopping, while 72% have cut back on non-essential shopping. A further 38% are using less electricity and gas at home, and 18% say they’re considering moving back in with family to cut costs. 

Almost a third of respondents (31%) say they are avoiding extra course-related events such as conferences and field trips, while 27% are coming to campus less often due to travel costs. 

A fifth of those surveyed (19%) are considering switching to fully remote learning, while a further 19% are thinking about pausing their course altogether. 

Along with cost-cutting, more than half of students (52%) said they had dipped into their savings to get by, while a quarter (25%) reported taking on new debt. 

Of these, 66% said they turned to debt because their student loan was not enough to cover living costs. For almost half of the students surveyed (48%), turning to family for money was not an option.


1 September: Average Student Will Spend 19% More Than Last Year Getting Ready For The New Academic Year

The average student expects to spend £1,027 preparing for the start of the new academic year. It marks a rise of 19% from last year in the wake of soaring living costs, according to the Back to Campus report from UNiDAYS – a student affinity platform.

For first-year ‘fresher’ students, planned spending is higher still at an average of £1,215.

Groceries and household goods was the most popular category of spend with 65% of returning students and 75% of first-year students expecting to make these purchases. 

The majority plan to shop with larger stores such as Tesco and ASDA amassing a total spend of £281 million before the new academic year gets underway.

However this is dwarfed by the staggering £948million due to be spent on electronic gadgets, according to the report. In total, 38% of UK students say they will buy new laptops or other hardware before the start of term, while freshers are expected to spend 42% more in this category than returning students. 

Of those students surveyed by UNiDAYS, 64% say they plan to buy clothes, spending an estimated £252m at favoured retailers including ASOS, Primark, Zara, Nike and New Look. 

The report also found that 64% of students plan to buy cosmetics before the start of the new term, spending a collective £136 million.

Despite the cost-of-living crisis, most students are factoring entertainment into their budgets with 53% planning to purchase a home entertainment subscription, and 62% intending to sign up for a music streaming service. 

Alex Gallagher, chief strategy officer at UNiDAYS said that this year’s new and returning students are facing ‘significantly increased costs’ to prepare for the year of study ahead – and warned that retailers must adapt.

He said: “It’s crucial that brands adjust their offering – adopting a strong pricing strategy which will help them to better resonate with the Gen Z audience priorities and values during the current economic climate.”

UNiDAYS also found that a third of students plan to live at home during their studies during the next academic year, reducing expenditure on groceries and other essentials.


18 August: Money Tips For Students As Tertiary Acceptance Rates Soar On A-Level Results Day

More than 425,000 students have been admitted to university or college this A-Level results day — the second-highest number on record.

Grades are lower on average than the teacher-assessed results of 2020 and 2021, but higher than 2019 when students last took in-person exams.

  • 36.4% of all grades were A* or A
  • 62.2% of grades were B
  • New T-Level qualifications saw a 92% pass rate
  • Overall AS results were higher than 2019, with 25.2% of grades an A
  • 19% more students were accepted into their first or second choice course than in 2019.

Dr Jo Saxton, chief regulator of exam regulator Ofqual, said: “Today’s results are a testament to students’ hard work and resilience.”

Saving tips for incoming students

Students starting university this September face record-high living costs, with inflation soaring to 10.1%

Although these rising costs pose a challenge, there are steps incoming students can take to save money and make the most of their budget:

  • Be cautious with credit cards: Although having a credit card in your wallet for emergencies can be helpful, you should always aim to clear the balance in full each month to avoid expensive interest charges.
  • Avoid borrowing wherever possible: It might be tempting to use ‘by now pay later’ services such as Klarna, but these are best avoided. If you miss a payment or make it late, this could have a negative impact on your credit score, making it more difficult to take out credit — such as a mortgage — in the future.
  • Use your overdraft carefully: An interest-free overdraft is a useful lifeline for many students, but be careful to stay within your limit or you could be hit with fees and interest payments.
  • Make a habit of budgeting: Take the time to establish a manageable budget. Work out your income, accounting for student loans, part-time work, savings and family support, and divide it across the number of weeks it’s allocated for. Once you know your weekly budget, planning purchases, food shops, and social events is much easier. Since student loans are often paid in a lump sum, be careful not to splash out at the start of term, leaving yourself in a difficult position later on. If you have start-of-term expenses such as textbooks, subtract what you’ll spend from your total income before allocating it.
  • Try buying in bulk: Buying food and drink in bulk is often a cheaper way to shop. You could try teaming up with flatmates to buy non-perishable essentials such as dried and canned goods, toiletries, or cleaning products and split the cost.
  • It pays to have contents insurance: Before you head off to university, check whether any of your valuable possessions, such as laptops, cameras, phones, or a bicycle, are covered by your family’s home insurance policy. If not, taking out a contents insurance policy of your own can save you money in the long run, since you’ll be able to replace valuable items if they are lost or stolen. 
  • Hunt for student discounts: Many businesses, from Spotify to New Look, offer student discounts so it’s always worth checking. Your student union will also have information about discounts being offered by local businesses.

16 August: Students Struggle With Rent Amid Cost-Of-Living Squeeze

Nationwide says 66% of university students are struggling to afford housing costs or falling behind on their rent – a sign of the UK’s deepening cost-of-living crisis.

The building society surveyed 1,000 students throughout the UK and found that, to contend with soaring rent, food and energy prices, 73% of students have borrowed money from family members. 

Around half (47%) say they feel ashamed or embarrassed about asking to borrow money, while 36% feel they cannot ask their family for money at all. A further 42% of students rely on their overdrafts to meet essential living expenses.

Another study by HSBC revealed similar findings. The bank’s poll of 2,002 current and prospective students found 57% rely on borrowing to cover essential costs. Of these, 42% use loans from family, and 37% have taken out an overdraft or bank loan. 

Faced with record rental prices, 24% of students told Nationwide that housing costs were an important factor when deciding which university to attend. 

A significant number of students also say they are teetering towards homelessness. In Nationwide’s survey, 14% of respondents feared they could become homeless within the next six months. 

Among students who do not expect to become homeless themselves, 22% know someone who has been homeless in the last 12 months.

Although students face financial pressures throughout the UK, the percentage who worry about homelessness varies by region. 

In the West Midlands, 21% fear homelessness in the next six months, compared with 20% of students in London and 17% of Yorkshire and Humber.

Polly Neate, chief executive of housing charity Shelter, said: “No student should have their education derailed because they’re worrying about how to make ends meet. 

“Yet record-high rents and crippling food and fuel bills are pushing worrying numbers of university students to the brink of homelessness.”

Students turn to ‘side hustles’ to make ends meet

When they arrive at university, a significant number of students turn to part-time work to cover essential living costs.

HSBC’s study found 61% of students have a ‘side hustle’ such as an online business to supplement their income, while 51% work a part-time job. 

As well as earning and borrowing, more than half of students (55%) are cutting back on their spending in the face of rising living expenses. 

Tom Wolfenden, head of retail banking at HSBC, said: “A-Level results day marks the beginning of an exciting period for students. Many are finalising decisions around university choices and planning to leave home for the first time.

“However, we also know that in the current climate, students are facing more financial pressures than usual.”


10 August: Interest On Student Loans Slashed To 6.3% To Shield Against Soaring Inflation

Interest rates on student loans in England and Wales will be fixed at 6.3% from September, the government has announced — lower than the 7.3% cap it initially proposed in June.

Rates on student loans are reviewed every August, and calculated based on the current Retail Price Index (RPI) plus 3%. Because soaring inflation has pushed up RPI graduates would be facing a 12% interest rate without intervention.

The new lower rate means that graduates with a typical student loan balance of £45,000 will now accrue £210 less interest each month compared to if the rate had jumped to 12%.

Angela Jenkyns, minister for skills, further and higher education said: “We understand that many people are worried about the impact of rising prices and we want to reassure people that we are stepping up to provide support where we can.”

“For those starting higher education in September 2023 and any students considering that next step at the moment, we have cut future interest rates so that no new graduate will ever again have to pay back more than they have borrowed in real terms.”

A spokesperson for the Student Loans Company (SLC) said that borrowers do not need to take any action to benefit from the reduced interest rate — the change will be applied to their account automatically. 

However, while the rate change lowers the amount of interest graduates accrue on their student loans – and therefore the total debt owed – it will not translate into lower monthly payments.

Student loan repayments are income-dependent, with borrowers paying 9% of any earnings above £27,295 a year. But, according to the government’s own figures, an estimated 80% of students starting an undergraduate degree in 2021 or 2022 will never repay their loan in full. This means they will see no benefit to the rate reduction.

The changes will not affect graduates who began their studies before 2012, Scottish graduates, or those with postgraduate loans – as these rates are calculated differently.

Interest rates for Student Loans are due to be reviewed again in December. 


4 August 2022: Student Renters At Risk Of Missing Out On Government’s £400 Energy Discount

University students entering into privately rented accommodation are at risk of missing out on the government’s energy discounts. 

Renters whose energy bills are included in the cost of their rent may not benefit from the discount, consumer charity Citizens Advice has warned. 

With average energy bills reaching record highs of more than £300 a month, the government has committed to give every household a £400 discount on their bills this autumn. 

The discount will be applied to energy bills automatically, in six instalments between October 2022 and March 2023.

Where the landlord is responsible for the energy bills, the discount will be applied to them rather than tenants. And there are concerns that renters whose utility bills are included in their monthly rent payments may not have the rebate passed on.

According to Office for National Statistics (ONS) data, 13% of renters — accounting for 585,000 homes — have energy bills included in their rental payments.

This kind of rental arrangement is especially common among students. A 2018 survey by utilities provider Glide found that 63% of students had utility bills included in their rent. 

Polly Neate, chief executive of housing charity Shelter, said: “Tenants whose energy bills are included in rent or service charge cannot directly claim the energy discount. Instead, they will be at the mercy of their landlord passing on this much-needed support.”

Although landlords are not legally obliged to pass on the £400 energy discount, they are not allowed to overcharge tenants for energy. 

To ensure you only pay what you owe, Shelter recommends keeping track of how much energy you are using by taking regular electricity and gas metre readings.

Polly Neate adds: “It is unfair that those at the very sharp end of this crisis could miss out on this much-needed support. The government is looking into this as they’ve acknowledged it’s not right.”

Organisations including Renters Rights London are urging tenants to contact their landlord in writing if they do not pass on the government’s energy rebate.

You are within your rights to whether it will be delivered via bank transfer, or deducted from a future rental payment. If your landlord does not pass on the discount, contact Citizens Advice or Shelter for guidance.



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