Assessing the realities of student income and expenditure

The fact that the publication of the Student Income and Expenditure Survey (SIES) findings had been so delayed had let several notable commentators on HE to become suspicious about what it said. However, when it was finally published last week, it became clear that concerns should have been more about methodological issues and choices than the results itself – but these do have serious implications for policy and information provision.

Sitting down with a 487-page report is a humbling experience. At such length, and with such (entirely commendable) exhaustive data, the Department for Education (DfE) should be praised for giving us an unfiltered blast of insight. But there’s a nagging feeling of concern about the way student fee loans are treated.

The median full-time student studying in England in 2014/15 took out a £9,000 fee loan. After applying to the Student Loans Company (SLC), these funds will be paid directly to their institution. On graduation, and once past the salary threshold, repayments to the SLC will commence. But, to retain consistency with previous iterations, SIES treats the loan as student borrowing, and tuition fees as participation-related expenditure.

Further cognitive testing needed?

On one level this is true – but on another, it is radically different to the way students actually experience the system. It is no small wonder, then, that the analysis reports a serious issue with the way questions around borrowing have been understood. The confusion this may cause is nicely summarised in the conclusion of the report.

Student spending has risen since the last survey, driven by increases in tuition fees, and student income support has risen to compensate. In most cases the students do not see their increased income, as support such as fee loans are paid direct to their institution. So while income may be nominally rising, students may not feel any better off. (p458)

This is a fair point – but it was not taken account of in the design and the deployment of the survey instrument. (And in passing, if the survey instrument had actually been published – as is common research practice – we would be able to make a judgement on this for ourselves.)

The narrative reports that:

The question capturing student loans taken out in previous years did not work as expected. In particular, it appears that about half of second and third year full-time students who could be expected to have taken out a student loan in previous years (because they took it out in the current financial year) reported that they had not taken out the loan. This is likely to be due to the question wording and affects both 2014/15 and 2011/12 estimates. (p349)

This kind of thing would usually be picked up in the cognitive testing component of survey instrument design. This was carried out (you can read about it on page 469) but only for changes between the 2011/12 survey and the 2014/15 survey. Again, one wonders why – given the huge change in the student finance system in the intervening years – a change to the instrument was not considered, or at the very least likely problems with the existing instrument tested?

So what can we say about student income?

Away from this confusion, there is a lot that is of interest, though we’ll occasionally need to remove £9,000 from various figures (and £3,375 from 2011-12 figures) to make things clearer. Here we’ll be using median rather than mean figures, as the removal of the fee loan/fee component, is better done using the experiences of the majority of students rather than a nominal “average” student that will include the effects of some fairly unusual circumstances (the famous “the average person has 1.97 legs” fallacy).

Looking at table 7.25 (p434) we can impute that non-fee loan borrowing for the median first-year full-time student has dropped slightly between 2011/12 and 2014/15, from £4,008 to £3,610, compensated for inflation. Table 7.20 (p429) adds some further detail – the use of commercial credit has risen slightly, there’s more use of arrears (on bills), but significantly less are use of overdraft facilities. This latter is change is likely to be linked to the availability of government-backed maintenance loans on better terms, and wider availability of grants in 2014/15.

We do forget how widespread (and useful) student grants were in the mid-teens. Loans and grants accounted for 67% of full time students’ income in 2014/15. Nearly half of full time students (48%) received some income from maintenance or special support grants – a source of non-debt income that no longer exists for today’s students – both are now offered as loans, a legacy of the short-lived Conservative government of 2015. Interestingly, another piece of research – released in parallel and covering those considering applying to HE in 2015 – suggested that “Only a small proportion of applicants reported they would no longer apply to university: 94 per cent would still aim to go to university, and, as with the results of the survey, this was less common among lower socio-economic groups (89 per cent).”

There’s been little written about the idea of student savings – the idea of students having savings is difficult to imagine for many – but we here the huge influence of parental background. If your parents have a professional/managerial background, you are likely to have a much bigger savings pot than your peers with parents with other employment.

And how did students spend their money?

Again, ignoring the increase in fees, the big increase is in the cost of housing. Despite a negligible inflationary rise, full-time students were paying 13% more in 2014/15 than in 2011/12. Other costs seemed to be staying steady, and general living costs actually fell slightly – with the appearance that students are spending less on. Food accounts for a quarter of these costs, with “personal items” (everything from clothes and grooming products to gifts) making up another quarter.

The cliche of the hard-drinking student, however, does appear to be dying out – only an eighth of full-time student spending goes on entertainment, which includes £338 a year on alcohol (nearly two rounds of drinks in a central London pub…)

There are significant costs associated directly with studying that are not covered by student loans. These participation costs include travel to and from campus, books, and other equipment – though the report lumps them in with fees. We’re not given median values here, but if we subtract the average tuition fee value for 2011/12 and 2014/15 we see a substantial drop from the older value to the new one for full time students.

The report introduction (p24) offers a useful summary of the detailed spend:

Full-time students spent an average of £512 on direct course costs such as books, computers and equipment, and part-time students spent £410. Across full-time students, first year students, those studying certain subjects, and those studying at FECs reported the highest expenditure on direct costs. Among part-time students, spending on direct course costs was highest among first year students (and also final years), those studying certain subjects and those studying at HEIs. Full-time students spent an average of £404 over the academic year on facilitation costs (such as course-related travel), and facilitation costs were highest amongst those full-time students who lived with their parents.

The mean cost of books and other course-related materials for full-time students was £512, but the median was £310. 92% of all students had some additional direct cost to their studies – which would have to come out of their budget for maintenance and living costs.

So much more…

There’s a lot of data in the report and plenty more to unpack. I’m conscious that I’ve not yet looked at gender differences, subject differences, ethnicity, or even the detail of the differences between full and part-time students.

Compared to the efforts made to present NSS or TEF data, or the planned apps for LEO, it feels like some real presentational effort with this report would be of great help to students. Certainly, it is the kind of information that the recent OfS report saw students asking for – rather than historic salary comparisons perhaps the government should make it easier for a prospective student to access more detail on actual student income and spending.

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