At the last general election, one of the core pledges from the Labour Party was to break down the barriers of opportunity.
Quite rightly, the focus has been on early years intervention, with a view to extending opportunity to all, irrespective of background – including the ability to attend university.
The problem, as readers here likely know, is that getting to university is not where the barriers to opportunity end.
The higher education funding crisis means universities are on the brink of bankruptcy, yet are facing more demand than ever from students from lower socioeconomic backgrounds.
Undergraduate students without external financial support are struggling – some are working full-time alongside their degree, others are accessing foodbanks due to protracted real-terms cuts on undergraduate maintenance loans.
This state of independence shall be
One group experiencing the blunt force of this funding squeeze are independent students. This includes those who are estranged from family, statutory care leavers, and those who have supported themselves financially for three years preceding entering higher education.
Whilst there is quite a large gap in research on these students, we do have more information relating to specifically estranged and care experienced students (which includes anyone with experience in the care system, irrespective of contemporary support from primary carers).
The drop-out rate and attainment gaps for this group is stark; for example, care leavers are 38 percent more likely to drop out than the average student. The attainment gap for estranged students and care experienced students is 13 percent.
The causes of this disadvantage are vast and amorphous. But, research by the Unite Foundation, a charity supporting estranged and care experienced students, found that:
…the students we support progress from their first to second year at the same percentage as non-care leaver students and achieve a ‘good honours’ degree within 3 per cent of non-care leaver students. Degree completion rates are only 6 per cent below non-care leavers and significantly higher than for other care leaver groups.
Said support is primarily financial, with the charity offering free accommodation to select students at partner universities. Whilst there is a gap in research, we know that 84 percent of estranged and care experienced students report worrying about money “all the time”, despite almost nine in ten working alongside their studies.
Hence, this article seeks to propose a workable solution for the Government to begin redressing this disadvantage, without needing to set alight the fiscal rules which we know will not be departed from.
The proposal
There is currently a pre-existing mechanism to provide financial support to students year round used by Student Finance England (SFE). When a student is on a “long course”, defined as a course which lasts for longer than the standard 30 weeks and 3 days each year, can access a weekly additional loan for the period beyond the standard academic year.
For students in London not living with parents, this is £145/week, and for those outside of London, this is £113/week for the 2025/26 academic year.
As this mechanism is pre-existing and SFE already holds data on students who have independent student status, there would be no great difficulty attached to extending this optional loan to independent students, pro-rated to cover 52-week living costs.
This would amount to £2,429.50/year for independent students outside of London, and £3,117.50 for those in London.
Hence, the proposal herein is to rebrand the “Long Courses Loan” as an “Extended Maintenance Grant”, established to enable independent students to better support themselves year-round, in turn reducing the unjustifiable gap in attainment and attrition rates.
The justification for this change isn’t merely that independent students must support themselves 52-weeks a year (although, that would be good enough!). There are plenty of hidden costs, such as guarantor schemes and rental costs immediately after university, which presents a strong case that independent students ought to be eligible for an uprated loan option.
That’s before factoring in standard costs like increased bills and living costs compared to students who have a home to return to over the long periods outside of term time.
A net-zero costing option
The immediate problem with the above, at face value, is that it would be asking for blood from the stone of Reeves’ already stretched fiscal purse strings. This is a challenge that can be overcome.
The OBR calculates the net cost of student finance to the Treasury by using a complicated formula to project the long-term repayment rate of student loans. As most never fully repay their undergraduate student loans, this is a costly part of the Department for Education’s budget.
It’s not really important to understand the ins-and-outs of the specific formulaic projection here. It is, however, important to understand that not all loans are made equal. The postgraduate student loan, which provides a lower principal loan and repayment threshold, generally is attributed net zero cost, if not a net positive contribution, to the Treasury.
It would not be impossible, or grotesquely offensive, to use this principle for the proposed Extended Maintenance Loan.
Instead of the debt piling on top of a mountain of undergraduate debt which will never be repaid, it could be put into a separate pile with a separate repayment rate and lower threshold (it would be ideal if this specific pot weren’t subject to the same levels of extraordinary interest which comes attached to the student loan to enable full repayment).
An imperfect solution
At this point, it’s worth explaining why I’m asking for a loan which will, in effect, punish those who have likely already experienced extremely traumatic events and have massively defied odds to be in university. (Wonks who live and breathe higher education can probably skip this section.)
The student loan system we have is fundamentally regressive. Most students are dependent, thus their parents are income assessed. Accordingly, students with parents who are lower earners borrow more. For those whose university education may be cheaper than their formative education, there is a buy-out option to not borrow anything at all.
This has a scarring effect, with those who borrow the most saddled with a compounding interest rate of at least the rate of inflation, meaning often they are not repaying their loan, but merely covering some of the interest.
In the long term, this means that students from lower socioeconomic backgrounds are punished with a nine percent higher effective marginal rate of taxation for their whole working lives. For those who require a masters, this is 15 percent (although, as noted, they will likely repay this after a few years).
Basically, our student loan system operates as a reverse Robin Hood taxation system, hence my descriptor of it as regressive. As much as I would love to tear this system apart, that is not an ask which is likely to be actionable by the current government.
So, we then come to the question of: how can we give independent students more funds, for no money, without punishing them for being poor? The answer is ultimately a question of weighing up pros and cons.
It is better that independent students have an option to access a higher loan amount, even if it means higher repayments in the years following graduation, than have them drop out or take on so much paid work they fail to achieve an upper second class degree. This is likely to impact their earnings potential and be more costly than repayments on the Extended Maintenance Grant.
We can soon expect a review of student finance by the government. It may be the case that this ask is actually too reasonable, and that the government makes good on their promise of grants.
However, the cynic in me suspects that independent students will continue to fall off the radar. I also suspect a very easy win is to calculate the exact point students generally will never repay their loan, and rebranding that top-up as a “grant” with effectively no impact on the Treasury’s spending forecasts.
Therefore, the above is one effective, simple, and prospectively cost-free way that we can redress the disadvantage faced by independent students, breaking down one of many barriers of opportunity prevalent in our nation.
