Lynne Condell manages the money advice team at the Liverpool John Moores University, is a former chair of NASMA, and in 2013 was awarded an MBE for services to higher education.
It was a pleasant surprise to read in the latest Unite Students Insight Report that three quarters of students consider themselves to be good with money. Such high levels of confidence threaten to put me out of a job, but if so, then great: my work as a student money advisor appears to be done.
Unfortunately, the survey’s findings show that nothing is quite so simple. 40% of respondents are stressed or very stressed about managing their money and 18% have gone without food or bought less food in order to save money. These statistics make me feel incredibly frustrated by a student finance system that unnecessarily damages the wellbeing of so many (primarily young) people.
I feel the need to point out that despite what stereotypes depict, the majority of students I work with do not behave intentionally irresponsible with their money. In fact students are actually better at managing their money than many assume. A significant number of the difficulties students face are simply a normal part of growing up. The challenges of learning to manage money independently for the first time are often forgotten by adults; it is safe to say that it is very much like learning to ride a bike. That said, often our parents (or someone responsible) taught us how to ride a bike, but how many parents teach their children what transactions on a bank statement mean, how to pay a bill, or to do the weekly shop on a budget?
The recent inclusion of financial capability in the National Curriculum has been an important step towards improving the financial literacy of those in compulsory education. However, this development is only a small step in the right direction and does little to address the wider life skills associated with effective money management. It is only once we start to practice these things that we can start to make informed choices about our money.
Some readers may have little sympathy with students who say in the Unite Report that they have had to cut out social activities due to financial difficulties. Yet we so often agree that going to university is about much more than studying a subject to a higher level.
Socialising, hobbies and developing cultural capital are all important parts of student life, especially in relation to induction, retention and developing employability skills and attributes. Invariably, these activities cost money, and so they are unequally available to students depending on their financial support. This also links Unite’s findings about stress: those from lower socio economic groups report higher levels of money related stress than their better off counterparts.
We know that debt causes anxiety, stress and general psychological distress. A significant amount of work has been done by sector to reassure students that student loans are not ‘normal debt’, but this report confirms that there is much more work to be done on this. The headline messages about the affordability of student loans do not seem to be filtering through to some students who are clearly worrying about how much their education is costing rather than relishing the long term benefits it will bring.
If the current student finance system is causing stress and is not meeting the needs of its users then it must be reviewed. Few products are allowed to keep on being sold in the same way when they cause users distress. In addition, we must urgently revisit the question of introducing monthly student loan payments. It is much less stressful to wait six days until payday without any money rather than wait six weeks until the next term’s payment date. Breaking down loan payments into smaller manageable payments would help students develop money management skills that will then be far more relevant after graduation: few people are paid their salary in instalments every four months.
The current system only encourages a ‘feast or famine’ mentality. Introducing monthly loan payments can only save everyone – students, universities and taxpayers – money, time and stress.
It is right that those that benefit from higher education should contribute to paying for it, but sometimes we forget that the whole of society benefits from an educated workforce. We should consider whether the current student finance system is fit for purpose, not only for students, but for wider society as well.
The Unite Students Insight Report was published on 31 August 2016. This article is part of a series inspired by the report and the wider dataset.