The upcoming general election has offered many of us the opportunity to reflect on the student finance system. The political rhetoric is entirely focused on the headline-grabbing issue of tuition fees, rather than the more prosaic topic of student living costs. And it is easy to understand why: until 2012, it was a cultural anathema for UK students to pay the full costs of tuition. By contrast, full grants for living costs started to be phased out more than 20 years ago.
The devolved administrations of the UK are natural Petri dishes for studying student finance, not only in terms of fees, but also on meeting student living costs. Interrogation of the Students Matter dataset allows us to learn more about how these different approaches drive different behaviours among students.
Tuition fee loans cover the full costs of tuition, whereas the student finance package for living costs often does not, as the NUS Pound in your Pocket survey showed. Students Matter 2014 suggests only half of undergraduates and a worrying quarter of applicants believed the student finance package could meet their living costs. This means that student financial behaviour needs to be understood within this context of serious financial constraint, as well as attitude towards debt.
Welsh students reported the highest use of grant funding to meet accommodation costs at 46%, compared to 35% of English students and only 9% of Scottish students. The greater use of grant funding among Welsh students is not surprising given the much higher levels of grant available to them. In 2014-15, Welsh students from the poorest households can access over £5,000 per year in grants, and the Welsh grants system has the longest ‘tail’, with money available to students up to a £50,000 parental household income. This greater ability to access grant funding appears to have an immediate impact on the need to work during term time. Only 21% of Welsh students say that they will need to work during term time to meet accommodation costs, compared to 32% of English students and 35% of Scottish students.
The rebalancing of Scottish student finance at the start of the 2013-14 academic year towards higher loans and away from grants, explains the lower use of grants. This is a change which affected both continuing and new students. That might explain a decline in grants, but perhaps a harder riddle to solve is the low reported use of loans among Scottish students. Only 35% of Scottish respondents said they used student loans to help pay for their accommodation, compared to 71% of English and 75% of Welsh students. This is partly, though not fully, explained by the higher proportion of Scottish students who live at home while studying. Worryingly, it seems Scottish students could be making up a shortfall with high interest debt: 16% of Scottish students claimed to be using credit cards to fund their time at university, compared to 9% in England and Wales. There was also a higher reported use of payday loans in Scotland – although the sample size was too small to make this any more than indicative.
The differences between student finance packages allow us to begin to unpick the impacts of different balances of spending power and total debt on student behaviour. The Welsh system, which provides the highest spending power and lowest debt to students from poorer families, also appears to reduce the need to work during term time which reduces the potential disadvantage that these students may otherwise face.
Less obvious is why some Scottish students seem to be avoiding student finance altogether, but show a higher use of credit cards and other, riskier forms of debt. We might hypothesise that there are groups of students who are trying to avoid graduate debt altogether, but instead risk falling into higher interest debt if living costs exceed their budget. The dataset is unable to answer this question, but a further targeted study could.
These are questions which should interest policy makers and politicians. Tuition fees are an important ideological issue it’s true, but it is student finance for living costs – with its complexities and constraints – which makes the biggest day-to-day impact on students’ lives. Poor policy now could drive students into risky debt which will affect them for many years to come.
*Unite Students is running a financial awareness campaign during Student Money Week 9-13 February, inspired by the survey findings and in consultation with NASMA.
This article arose from a data hackathon, run by Unite Students and NUS Services in partnership with Wonhke. The dataset is drawn from the Students Matter survey conducted Dec 2013-Jan 2014 by NUS Services and published in May 2014 by Unite Students*. Comparative figures on the different student finance packages in the UK have been taken from Lucy Hunter Blackburn’s analysis in her review of the Scottish student finance system, February 2014.