Jim is an Associate Editor at Wonkhe

The other day in parliament, Jo Gideon (Conservative MP for Stoke-on-Trent Central) asked universities minister Michelle Donelan about financial help for students.

She noted that many of her student constituents had been placed on furlough and had experienced reduced hours, while also being locked into private tenancy agreements throughout this academic year. She also noted that many therefore have been unable to benefit from rent reductions offered by Staffordshire University in her constituency to students living in on-site accommodation. She then asked:

What consideration has my hon. Friend given to students in similar positions across the country? Would she consider altering the loan available to students whose household income has been affected significantly during this difficult time?

As well as the usual magic money twig guff, Donelan came back with a reassuring sounding reply on the household income issue:

Any student who is not receiving the maximum loan but whose household income has changed by 15% may be able to get additional support. They should fill in an income circumstances form for the Student Loans Company and get the support available to them.

Note the neat trick though. Donelan was obviously referring to the household on which maintenance loans are assessed – in most cases, the parental one. But Gideon was asking about the student’s household. And to fix that problem, you’d need to acknowledge it, and then try to understand the nature and scale of it.

And I think we got it all wrong anyway

It’s pretty hard to argue that students have done well out of the Westminster government’s response to the pandemic.

Unlike the position in a whole raft of other countries, students have not found themselves entitled to any meaningful additional financial support at all. Most can’t claim universal credit and its temporary uplift, the big hit to jobs has been in the sort of opportunities that students usually take up, furlough hasn’t really been much use to most students, and they’ve not even been able to claim the payment for those on low incomes that have to self-isolate.

And we know from countless surveys that most students’ costs have either remained static, or have increased as they have attempted to bridge the digital divide.

But one of the questions the situation raises is why students have been forgotten in this way. It’s easy and tempting for a fairly left-leaning sector to just put that down to politics. We might also assume that the issue is the structure of government – that to the extent to which they see an issue, government departments like the Department for Work and Pensions (DWP) or Housing, Communities and Local Government (MHCLG) regard students as the Department for Education’s problem – which all too often sees higher education as big (boarding) school.

You might also blame the focus on working families, baked in assumptions about university being “big school”, or the guiding assumption throughout the pandemic that you help people by helping their employers. And I won’t even get into the complexities of devolution – where student funding tends to be “owned” by a student’s home country, institutional funding tends to be owned by the country where they’re studying, and the resultant mess of distributing hardship funding through institutions.

Sometimes I find another world

A big problem for DfE is that higher education is getting more and more expensive. Not only is demand up and growing, but the cost of the system gets more expensive when a recession means graduates might earn less. Both the number of students and the cost per student are on the up.

Shortly before the budget, the Westminster government published its “supplementary estimates” for 2020/21 which show additional budget allocations made to departments. DfE was given (sharp intake of breath) an extra £13.5 billion to cover both the estimated losses on student loans issued in the year (April 2020 – March 2021) and the likely downwards revisions to the value of already existing loans.

As ever the excellent Andrew McGettigan has a great blog up on his site with all the details, and it puts in some context what we might assume is a degree of reluctance on the part of the Treasury to step in to support universities, or more importantly students, or more specifically DfE with any more money for those universities and students.

A lot of this is about the amount the government expects back when it loans it out. As Mcgettigan notes, the £4billion in the original budget for 2020/21 reflects a now quaint-sounding aim of “incentivising” DfE to get estimated non-repayment closer to 30-35%. All of that work on “low value courses” always has been partly about value to the taxpayer than the student – a big policy goal is to improve the returns on loans that at the turn of the last decade were supposed to have a write-off of about 30p, but according to the OBR on budget day is now 54p.

That’s a major factor for the autumn, the Comprehensive Spending Review and the response to Augar. We should assume that government will want to a) spend less and b) have much more direct control over what it’s spending. And we should assume that to the extent to which students need more money, Treasury will want that to be found from DfE’s already growing allocation.

So tell me how we fail to understand

In the meantime everyone is trapped. Almost anything we could or should do for students now is assumed to be DfE’s problem and should be doable out of the loan system’s subsidy budget. But DfE lacks the ability to direct the expenditure in that way because of the system’s design. Hence letters from Michelle Donelan urging providers to help students with finances, and derisory hardship twigs.

Optimistically, I like to think that if the Treasury had noticed something like students struggling, they’d have done something structural rather than left the situation to DfE’s discretionary budgets. There’s still a bit of me that assumes that departments like the Treasury will have sought to fix problems that they can see.

But there’s no way the Treasury could have seen DfE’s Student income and expenditure survey, because it hasn’t bothered to run it since 2015. So on the assumption that it probably doesn’t listen to surveys carried out by the likes of NUS or Save the Student, are there other ways in which students ought to have showed up in Treasury thinking?

As such, something has been playing on my mind both in the run up to the 2021 budget, and on the big day itself. I’ve repeatedly heard Rishi Sunak argue that the government’s response to coronavirus has been “fair”, with the “poorest households benefiting the most” from its interventions. And each time I’ve been meaning to find out where students and student households fall within that argument, if at all – because surely student households are often fairly poor?

Showing them how much we really care

Sunak’s claim is grounded in a Treasury analysis of the impact of Covid-19 on working household incomes, with “working” being the first and most obvious problem. It was updated to accompany Budget 2021, and a dive in reveals that much of the analysis is centred around a dataset called “Households Below Average Income” that is looked after by the DWP.

HBAI is quite a sophisticated little project, but there are major issues from a student perspective. It uses something called the Family Resources Survey (FRS) to derive a measure of disposable household income, a survey that covers a sample of over 19,000 private households. But (and we saw this when ONS was trying to measure household Covid infections) those in “institutional” settings – like individuals in nursing or retirement homes or students in halls of residence – are not included.

Worse, where students are picked up in households outside of halls, the HBAI treats the receipt of tuition fee loans by home undergraduates as… disposable income! As the Resolution Foundation notes, that means that our statistical understanding of the financial situation of young people on average and students specifically is out, because they look measurably better off than other individuals who don’t have £9,250 a year flowing “through” the books – despite never being able to touch that cash (or, you know, withhold it from providers if they think the service isn’t up to scratch).

An alternative might be to use the Office for National Statistics’ Effects of Taxes and Benefits on Household Income data, but that has problems too insofar as unlike the HBAI, student loan repayments are not deducted from income (unlike other “tax”). That has the effect of disproportionately flattering the “income” appearance of those in their mid 20s to mid 30s – and as RF argues, both approaches fail a common sense test given that we want household income surveys to tell us meaningful things about living standards.

“There is no perfect solution”, says RF, “but the best approach would be to not count tuition fee loans as income and to deduct repayments from disposable income.”

When in fact we just don’t seem to care at all

You could play with the HBAI (a review of the methodology has been pandemically paused), but even then the dataset wouldn’t really be robust enough. You could recommission the SI&ES, but that was fairly clunky and only ran every few years anyway. And anyway, given the vast number of people we’re talking about, it’s clearly now time for a much better alternative.

One of the responses to ONS not knowing much at all about students from a Covid-infection and lifestyle perspective was for it to work with DfE to create a “Student Covid-19 Insights Survey (SCIS)” that has been telling us very interesting things about behaviour, infection rates, mental health and so on since late last year.

It’s almost certainly now a wise time for ONS to extend that piece of work to pick up students’ finances. It would help us to understand the financial situation of students in aggregate, pick up problems facing some types of student that policy needs to fix, and help us more definitively understand the relationships between things like mental health or non-continuation risk and student finance.

Crucially, it will be much easier to assess both the Treasury and DfE’s performance in addressing an income gap if those departments can actually see one. And more importantly, if we don’t develop better data now, any response to Augar coming in the CSR runs the risk of being dangerously oblivious to the financial situation that students face that Augar was in part supposed to sort.

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