How is the rising cost of living affecting students?

As UK household costs and bills increase, university leaders have warned students are at of risk becoming “the forgotten group in the cost of living crisis”.

According to the Office for National Statistics (ONS), over three-quarters of students are “concerned” rising costs may affect how well they do in their studies. Black students, students aged over 25, and students from lower socio-economic backgrounds are likely to be hardest hit by rising costs of food, transport, rent, and energy.

This Insight considers how UK students are affected by the rising cost of living and the support available.

Is maintenance support covering living costs?

Across the UK, maintenance loans are lower in real terms than last year. Save the Student, a student money website, conducts an annual National Student Money Survey. The 2022 survey, which polled 2,300 UK students between May and August 2022, found a monthly shortfall of £439 between the average student’s maintenance loan and living costs. This is up from £340 in 2021.

In England, the annual increase for maintenance support in the 2022/23 academic year was based on forecast inflation of 2.3%. Inflation, based on CPI, stood at 11.1% in November 2022. The Institute for Fiscal Studies (IFS) has argued higher-than-expected inflation has meant the value of maintenance loans for students from the poorest families is at its lowest level in real terms since 2016/17. It said the poorest students in England would be more than £1,000 worse off than in 2020/21.

Universities have called for an “immediate” increase of maintenance loans in line with inflation, and the return of maintenance grants in England.

Students from low-income backgrounds in the rest of the UK remain eligible for living cost grants.

The UK Government has said the nature of student support is determined on an annual basis only, but decisions “will have to be taken alongside other spending priorities, to ensure the system remains financially sustainable.”

Renting continues to be the biggest expense

The average student’s largest monthly expense is rent, accounting for about 45% of monthly living costs.

The 2021/22 Accommodation Costs Survey by Unipol and the National Union of Students (NUS) found the UK average annual rent for purpose-built student accommodation (PBSA) to be £7,374. This is a 16% increase since the last survey in 2018/19.

Privately provided PBSA and private landlords are more expensive than university accommodation, which suggests issues of affordability are likely to continue as private providers dominate the market.

How have food prices affected students?

With the price of food and non-alcoholic beverages rising by 16.4% in the 12 months to October 2022, many students are facing increasing food insecurity. The NUS published its Cost-of-Living Research in November 2022. Its online survey polled 4,500 UK students in October 2022, and found over a quarter had less than £50 a month after paying rent and bills (PDF).

In the Student Money Survey 2022, one in 10 students said they had used a foodbank in the past academic year and almost half (47%) admitted “money worries” had negatively impacted their diets. Similar results were found by the ONS in its Student Cost of Living Insights Study which polled 4,201 university students in England between October and November 2022. It found 62% of students said they were spending less on food shopping and essentials in response to rising costs.

Are students taking on more debt?

Students are taking on more debt and relying on credit cards because of rising costs. The ONS found one in four students had taken on new debt in the past year through higher borrowing and credit usage. The NUS survey found one in three reported “relying on credit cards to support them with everyday expenses” (PDF).

What is the impact on students’ wellbeing?

90% of students surveyed by the NUS said the rising cost-of-living had negatively impacted their mental health (PDF). Students said they worried about being able to eat, feed their family, and pay bills. Concerns about cost-of-living pressures are greater among older students, postgraduates, and those who work or have caring responsibilities.

The most common reasons cited for considering dropping out of university was student’s mental health (60%) and money worries (52%).

What support has the Government made available to students?

In response to questions about student support, the UK Government has said living cost loans and grants have increased by 2.3% in England and there is £261 million of student premium funding.

Previously student premium funding exclusively went towards widening participation efforts. Since the pandemic the Government has allowed funding to be used for hardship funding. It also highlighted a pre-existing measure which allows students whose household financial situation has significantly changed since initial assessments to have their entitlement adjusted.

Scotland introduced a general rent cap from September 2022 until at least March 2023. Students staying in university halls and PBSA will not see their rent increase during this time.

Northern Ireland increased the hardship budget by £2.8 million for the 2022/23 academic year and there will be a 40% increase in maximum student maintenance loans from the 2023/24 academic year.

Despite the NUS calling for the Government to introduce a “tailored student cost of living support package”, there remains only general cost-of-living support. These measures cover limited groups of students. For example, most students are unable to access benefits so are ineligible for the £650 support payment given to households receiving means-tested benefits. Only students who are tenants of landlords will receive the £400 grant through the Energy Bills Support Scheme.

What are universities doing to help students?

Most universities have a student advice/welfare service to advise on issues including finances and housing. Students concerned about their financial situation can contact their university to learn about additional funding, including hardship funds in England and Wales, discretionary funds in Scotland, and support funds in Northern Ireland.

Individually, many universities have expanded their hardship funding and support as costs rise:

• The University of York launched a Household Energy Grant giving students in all student households £150 towards energy bills.
• The University of Essex introduced support providing subsidized meals, removing exam resit fees, and increasing its hardship fund to£5 million.
• Queen’s University Belfast announced an £150 cost-of-living payment for most of their students.

Further reading

• Cost of living support for students, House of Commons Library.
• Student support for undergraduates across the UK, House of Commons Library.
• The value of student maintenance support, House of Commons Library.

About the author: Anastasia Lewis is a researcher at the House of Commons Library, specialising in further and higher education policy.

Image: 184 by littleyiye under CC BY 2.0 (image cropped)