What can we do about student accommodation costs?

The Augar Review had a great deal to say about universities and our spending.

But despite noting that “the cost of living is a problem for students”, the report made no recommendations to address a central part of this problem: the rising cost of student accommodation.

In 2014 – two years after the introduction of the £9,000pa fee limit and one year before the removal of the cap on the number of students universities could recruit – two-thirds of halls of residence accommodation was provided by universities.

Last year the private sector controlled over 50% of the halls of residence beds in the UK and average rent for student accommodation was 73% of the maximum student maintenance support. In large part because standard private sector contracts are longer than university contracts, private sector accommodation is also more expensive than university-owned accommodation: 8% on a weekly basis, 22% annually (figures exclude London). Accommodation costs are also increasing above inflation at an average of 4.8% per year since 2012/13.

Policy is personal

As a parent with a child going through university, these figures are not a surprise and anyone – parents, students, and taxpayers in general – interested in the cost of university is interested in students’ living costs.

Indeed, anyone interested in value for money for students, as well as making university accessible to all, is probably more interested in student living costs than tuition fee levels. It is unfortunately not uncommon to meet students who drop-out because of their living expenses. However, in the words of Jim Dickinson, if you can find a student who drops-out because of the prospect of repaying their loan “I’ll eat my hat.”

But on the accommodation issue all the Augar Review could, rather limply, recommend is that the Office for Students (OfS) “examine the cost of student accommodation more closely”. This is in stark contrast to its categorical recommendation on fees. Augar recommended an immediate freeze on fee levels followed by a cut to £7,500pa, albeit with the proviso that the Treasury should make up the difference.

Along with the recommendation that graduates repay their loans for 40 years – 10 years longer than they do now – Augar thinks that universities should get less to invest in theirs students’ education, that students should pay more for it, and that rising accommodation costs are someone else’s business.

Consequences

There is one particularly worrying implication of this. In 2017/18 the average maintenance loan for starting students was £6,200pa. Maintenance loans increase annually by inflation but fees do not. If fees are reduced then soon more than half the amount the average student borrows for university will have absolutely nothing to do with the direct cost of their education.

The re-introduction of maintenance grants (also proposed by Augar) will help some students and parents, although not all, but will do nothing to reduce the burden on the general taxpayer who, of course, will fund the grant.

Why was the Augar Review so focused on fees but unconcerned about broader issues that concern parents and students? Why does scrutiny of public money given to universities matter far more than scrutiny of public money given to accommodation providers?

Squeeze them

Whatever the reviewers might have believed, it seems that their recommendations were influenced by what Dame Neville-Jones has described as the desire to deliver universities “a hit”. This may have blinded the reviewers to wider financial issues that affect taxpayers, students and parents.

What could be done?

• Universities could build more accommodation themselves but, with private providers clearly keen to fund accommodation, it is very hard to make a case to government, students and parents that such capital investment is an intelligent investment of students’ fees.
• A second option would be for government – local or national – to own student accommodation themselves or partner with universities to own it. They would receive the rental income and, in effect, this would constitute a transfer of taxpayers’ money from one part of government to another. Government would also own an appreciating asset. Many councils already invest substantially in property.
• A third option is less radical. The OfS’s fourth strategic objective is value for money for students; its regulatory reach could be extended to regulate all companies who build and operate student accommodation.
• Alternatively, the government could require that all student accommodation providers have contracts with universities. Contracts would give universities some leverage to ensure there is more affordable accommodation – at Portsmouth our own halls are among the cheaper options. It could also ensure there is a greater emphasis on well-being considerations in accommodation design. There should be more communal spaces and fewer self-contained studios.

I am not criticising private accommodation providers. They saw a business opportunity and are to be admired for acting on it. Most behave honourably and are good partners to work with. But both universities and private accommodation providers get their income from the same source: taxpayers and graduates.

If scrutiny of universities is right because of the large proportion of our income that comes from the public purse – and scrutiny is right – the same scrutiny is due to accommodation providers.

Yet more focused on putting universities in their place than in seeing the bigger picture, the Augar Review seemed to forget this or was too afraid to tackle it. An opportunity to move an increasingly important issue up the political agenda has been missed. Not tackling it does not mean it will go away, especially at a time of year when parents are keenly aware of this very issue.