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“Frugality” won’t solve systemic student finance problems

The solution to the problems in student finance is a bit more complicated than encouraging students to be ‘a bit more frugal’, suggest Rita Hordósy and Tom Clark.
This article is more than 6 years old

Rita Hordósy is a post-doctoral researcher at the University of Sheffield

Tom Clark is a Lecturer in Research Methods at the University of Sheffield.

Jo Johnson told a Conservative Conference fringe event that students who are struggling to live on their maintenance loan can choose to get by in other ways. By living frugally, they can, apparently, avoid having to ask their parents to supplement the loan. They can also choose to work to increase their income, or even use money they have saved up before their degree to help balance their budgets.

The problem with this analysis – as any student who has taken out a maintenance loan recently will testify is that it is at best uninformed, and at worst simply wrong. The Government actually does have access to some relatively robust data on student expenditure in the form of the Student Expenditure Survey. It was last conducted in 2014. For some reason, the findings remain unreleased.

Johnson should also know that the Student Loans Company itself makes a direct assessment of household income in its calculation of loan entitlement. For household incomes of above £25,000 a year, this means a gradual reduction in the level of maintenance loan available, as shown in BIS’ own financial memoranda.

Let’s take the University of Sheffield as an example, and the stories of three stereotypical new entrants starting in 2016: David, Kasim and Jessica. They are all resident students who moved into student halls for their first year – just like a majority of our undergraduates do.


Jessica’s mother is a single parent, she earns below the threshold of £25,000. Jessica’s maintenance loan is the maximum, £8,430. As part of its scheme to support lower-income students, she gets an extra bursary of £1,500 from the University. This means she has around £107 per week after rent. Whilst £15.36p per day might appear to be a reasonable income to live on, this amount soon decreases when payments like travel, textbooks and technology are included, not to mention the usual food, bills, and clothes. Around April, she will also have to find the money for a large deposit for the flat that she will rent in her second year. The money will also have to cover the extracurricular activities that will enhance her employability and make her a more engaged student.

It’s also worth pointing out that the cost of her degree is going to be comparatively higher than the rest of her peers. The maintenance entitlement is actually an income contingent loan. Including tuition fees, Jessica can expect a debt of at least £53,040 upon graduation.


Kasim’s parents, on the other hand, have a household income below £45,000. This entitles him to borrow enough money to just cover the rent in student halls. If we take Jessica’s loan to be the amount of money the Government thinks students outside of London need to live on, he has a shortfall of £2,421 to make up. Unfortunately for him, Kasim’s parents can’t offer him any financial assistance beyond an occasional food shop, so he has to get a part-time job. He works for a well-known restaurant company earning minimum wage for an 18 year old. To balance his budget he will need to work at least 10 hours per week on top of his studies. The maximum recommendation made by universities is usually around 15 hours. Given that undergraduate outcomes have often shown to be adversely affected by excessive part-time work (there is a well-established ‘tipping point’ of 15-20 hours), Kasim will need to be very careful that his need for income will not adversely impact on his degree performance.


David’s parents earn a total of £63,000 each year. In this case the shortfall his family are expected to make up is £4,502 – just over £107 per week. Across his whole degree, this means that David’s parents are expected to subsidise his studies to the tune of at least £13,482.

These sorts of stories will be familiar to students and their families across England. Indeed, the Widening Participation Research and Evaluation Unit at the University of Sheffield has been following the lives of students across the length and breadth of their degree programmes, and we regularly talk to them in detail about their budgets. We also assess our own financial support schemes and have seen the importance of bursaries and scholarships in assisting the most disadvantaged students. Not only does it help pay for essentials, but also allows them the space necessary to fully engage in their studies and pursue all important ‘added value’ activities.

The Conservative Party’s continued focus on student loan repayment ‘terms and conditions’ is likely to have a very small impact on middle-earning graduates in the short to mid term, and the highest earners in the long term. However, none of the proposed changes will tackle the pressing problem of day to day budgeting, or the inequity in a financial support system in which students from the poorest families end up borrowing substantially more than their wealthier counterparts.  A review and a rethink is long overdue.  

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