Students shouldn’t pay for things they can’t use

Jim Dickinson wonders why students are asking if they have to pay for something they can't use - and why the questions are such a surprise.

Jim is an Associate Editor at Wonkhe

One of the striking things about students’ and their unions’ demands during the pandemic has been their modesty.

Students want to be given the support and time to complete their course (or research), not have to pay for things they’ve been ordered not to use, to have the disruption of the pandemic taken into account when they’re assessed, for their mental health to be supported and for the financial burden on them in relation to their education – both now and into a deeply uncertain future – to be relieved in some way.

It’s hardly the moon on a stick.

But if you’re a (home undergraduate) student in England or Wales that studies away from home, the news that you are being told not to move back into your accommodation until mid-February at the very least represents a potentially significant and specific financial problem.

Under the relevant regulations, the policy is that the rate of your maintenance loan is determined each term by the where you are living for the majority of that term. Students have a legal duty to inform the Student Loans Company of where they are so that it can adjust their entitlement up or down as appropriate.

After Easter in 2020, the regulation was sensibly relaxed – allowing students who were unable to move back to their properties to retain the higher rate and pay their rent. But as I write, SLC is maintaining that this time around the regs will apply unless and until the government(s) say so. And DfE says “We are working to help ensure students have appropriate maintenance loan support this term”, like the whole thing has come as a major surprise.

My own view, by the way, is that neither DfE nor the Welsh government should pay out the higher rate. That’s because that higher rate is designed to cover the costs of accommodation – and I can’t find anyone that believes that students should pay rent on housing that they’re being told not to use during a pandemic.

On the buses

Sometimes issues are so uncontroversial that they meet what some call the (person on the) Clapham Omnibus test. For example – very few people will argue with Marcus Rashford when he says that the state should supply free school meals during the holidays during the pandemic. Nor can you find many people that think that holidaymakers should shell out for a flight that still runs but that they’ve been told not to board by the government. Nobody’s charging for ongoing gym memberships when the doors are padlocked shut – even if it does send you a link to some Youtube videos of Mr Motivator.

You can always tell one of these issues when it gets written up in essentially the same way in both the Guardian and the Telegraph – yes, this was the week when incredulity at the idea that students who study away from home should be paying rent on properties they’ve been told not to return was uncovered as widespread and mainstream.

And the public agree. Yougov polling of 9,088 adults on January 7 had only 5 per cent responding that students should still have to pay their rent in full.

Who knew that 5 per cent of the public were buy-to-let landlords?

There are at least three issues here, potentially. The first is that students might have been “sold” shared facilities in halls – small computer rooms, common rooms, music rooms, libraries, pantries and launderette facilities – that they haven’t been able to use all year.

In privately run halls, these types of facilities are often lavish and very highly specced. There’s a place in Tottenham boasting of a games room, cinema, bowling alley, communal study room, a roof top terrace, an on-site gym and communal lounges on every floor.

Students shouldn’t be paying for things they can’t use, surely?

The second is that a lot of accommodation providers will charge for “all inclusive” bills. Wifi, heating, power and water are the most obvious – but there’s also increasingly on-site cleaning, laundries, security, maintenance and other events and services.

Students shouldn’t be paying for things they can’t use, surely?

And then there’s the room itself. Students that study away from home have been told, in no uncertain terms, to go home in the first of December and now to not return until they are told to.

Students shouldn’t be paying for things they can’t use, surely?

Help is coming

The UK-wide Competition and Markets Authority (CMA) has a set of statutory duties on behalf of the public – to ensure that consumers get a good deal when buying goods and services, to investigate markets if it thinks there are consumer problems, and to protect consumers from unfair trading practices.

Last March to help consumers understand their rights during the pandemic, it formed a Covid-19 taskforce, and issued a general statement on coronavirus, consumer contracts, cancellation and refunds. It said:

  • consumers will normally be entitled to a refund for any services they have already paid for but that are not provided by the business or which the consumer is not allowed to use because of lockdown laws (this may be a partial refund of the total amount the consumer has already paid, to reflect the value of the services already provided)
  • consumers will normally be entitled to withhold payment for services that are not provided by the business or which the consumer is not allowed to use because of lockdown laws
  • a business may be able to require the consumer to make a small contribution to its costs until the provision of the service is resumed, but only where the contract terms set this out clearly and fairly and the consumer is free to end the contract if they do not wish to pay these fees

I don’t know whether, given the nature of the specific issues that surround student accommodation and the nature of the legal agreements that surround them, whether the above bullets apply in a straightforward way. What we do know is that CMA says that it will take enforcement action if there is evidence that firms may have breached the law and will advise the government on emergency legislation if there are negative impacts for people which cannot be addressed through existing powers.

Last April, when CMA put the statement out, there was some excitement that the above principles might apply to student accommodation. Everyone’s favourite former SU sabbatical officer Martin “Money Saving Expert” Lewis said on ITV’s This Morning:

The Competition and Markets Authority has just revealed their new guidelines, they’ve said if you don;t get the goods or service because of coronavirus, you should get a refund. This probably applies in this case[student accommodation] but at the moment there is no enforcement.”

This obviously panicked the landlord community, whose website “Landlord Zone” reached out to CMA to see if it could get clarification. It failed, just like I did this past week – because while CMA has produced specific guidance for holidaymakers, people getting married and people with kids in nursery, it apparently thinks the millions of student consumers that could be affected here are not its problem.

Pass the parcel

What it did do is refer me to pretty unhelpful advice from Citizen’s Advice, and told me to consider the work of others in “the sector” and “regulators in terms of who is best placed to address an issue” including the OfS, DfE and the “Consumer Benefit Forum”.

But all three bodies are England only, and none of those bodies consider that they have much to do with student housing. CMA even referred me to this briefing from April from the Office for Students (OfS), which is at pains to point out that it has no remit to regulate providers of private accommodation, although it does say:

Beyond the summer term, many students will have already signed tenancy agreements for the next academic year. With uncertainty about when government restrictions will be lifted and providers can begin face-to-face teaching, many will be worried about whether they will be paying for accommodation they may not live in.

Maybe politicians could step in. All around the UK, ministers have been attempting to pin this on universities – ignoring HMOs and private halls in the process. Ministers at the Ministry of Housing, Communities & Local Government, Business, Energy & Industrial Strategy and the Department for Work and Pensions are, as usual, hiding under some coats until it all goes away. But the most egregious examples of avoidance have been from PM Boris Johnson, who twice in a week was asked about the issue at his Covid presser, and twice in a week fumbled around like a haystack in needles, only to reassure us that Gavin Williamson would soon have an answer. God help us.

It’s almost as if everyone saw this problem coming, agreed it was a problem, but everybody thought it was someone else’s problem to fix.

Zooming out

Just as it has with so many aspects of our lives, the pandemic serves to expose and exacerbate a whole host of problems with the student housing market and how it is run and regulated.

Once this is all over, we need to ask why it is that students can be tied into contracts so early, why the rights they have are so hard to enforce, and why nobody thinks that students are their problem. We need to ask bigger questions too – like how we’ve ended up in a situation where people believe that it’s their god given right to use the student maintenance system as a way to make vast profits, even during a pandemic.

Imagine if the money spent by the state on student rent over the past forty years had been ploughed into capital instead. Nationalising broadband and railways? There’s a much clearer case for nationalising student housing – an endowment to be transferred onto the balance sheets of universities in exchange for promises about rent costs and access in the future.

But for now, this isn’t over. Of course universities that depend on the money should have to rebate the rent, and government should step in to help with that. And while I find it hard to lose sleep over buy to let landlords, they could always be offered a payment holiday on their mortgages.

Whatever is cooked up inside DfE and No.10 to try to blow this crisis over, we should be wary about any framing of it as “student support”. It’s still incredibly important that we find the resources to support students that need support the most – particularly those for whom halls or their HMO is their main and only home, and for those who have “returned” already and are struggling with isolation or an absence of the part-time work they user to pay the rent with.

It’s also crucial that it doesn’t look like we’re tricking them back onto campus for (almost) no reason just so that the rent still rolls in:

This must not become about students being “helped” with the cost of rent, and nor should it just be about the risky business of “cancelling” contracts (although that would help). This is about not being charged for things students can’t use. If you can’t see the case for that, I’ll be the first to remind you when your tour operator refuses even to postpone the holiday you can’t go on – and I’ll suggest you don’t hold out much hope getting a pay-out from the “holidaymaker’s hardship fund”.

5 responses to “Students shouldn’t pay for things they can’t use

  1. My daughter lives in private accommodation. She has been at home since last March and I have had to pay full rent. No discounts, no reductions, even though the facilities are not being used. It’s all well and good that the Universities and large providers are ‘doing the right thing’ (although they will probably have to raise their rents to cover their losses) but this benefits a very small number of students. What about all those who live in private accommodation? That must be around 70% of students.

  2. Great point Viv. Also, most HEIs business models need this income to provide frontline resources so, without it, there’s less to spend on teaching, research and everything else. So, sympathy for some students who can’t use their rooms, but more sympathy for the greater numbers who could suffer if resources need to be cut to pay for the refunds.

  3. There are a large number of students who live independently, either full-time or during term-time, such as: care leavers, estranged students, mature students, student parents, those with overcrowded homes, people for whom home is unsafe… to name just a few.

    To say ‘My own view, by the way, is that neither DfE nor the Welsh government should pay out the higher rate’ is exceptionally short sighted and falling into the trap of viewing all students as 18 year old school leavers with parental support – something we (in the sector) are constantly trying to highlight to SLC/DFE/government/media/public…

    Having said all that, I completely agree with your main point, that students shouldn’t be paying for things they aren’t using, and hopefully institutions and students can work together to find a way forward to make a fairer system for all, though I won’t hold my breath. Universities have been hung out to dry by Government and they in turn are passing this pain on to students!

  4. There are a lot of complex legal and commercial issues in the idea that students shouldn’t pay for accommodation they have signed up for but can’t use. Many universities have done the right thing and waived rents for the duration of lockdown. But this will bankrupt most private providers of PBSA and university cities are full of such operators. They mostly fund their developments by debt – extending the logic of the CMA down the supply chain – will banks or bond holders forgive debt repayments for accommodation that private providers who can’t recover rent as a result of lockdown law? Unlikely. So if private providers are forced to waive rents for a prolonged period then expect a wave of bankruptcies and a loss of investor appetite to fund future projects.

    Universities may similarly have financed their accommodation by debt, but they have much more than a simple short-term landlord/tenant relationship with their students and they have multiple other sources of income to fund the cost of rent waivers from. So it makes good business sense for a university to ‘do the right thing’ to protect its longer term relationship with its students/alumni.

    Of course, this is expensive for universities, so ultimately someone else will pay for this – probably in the form of lower future investment, lower levels of ‘quality’ in current facilities or in the form of lower levels of staffing for those without the cash headroom to fund the cost of rent waivers.

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