The minimum wage is going up. Will maintenance loans rise to match it?

On a 35 hour week, that’s £22,222 – just over £1,400 a year.

Minimum pay for those aged 18-20 will rise to £10.00, with this 16.3 per cent rise being the highest on record. The apprentice rate will rise £1.15 to £7.55.

I’m typing on budget day – we’ll hear a lot today about putting money in people’s pockets, maybe a little less than planned about “hard working people”, and “investment, investment, investment” in the future.

Whether those studying count as hard-working people is a question that’s been rather obscured by sharp-elbowed boomers who seem to think that owning a portfolio of six buy-to-let rental properties that don’t reach the decent homes standard counts as hard work.

And whether the country decides to frame the costs of education as an investment in the future along with infrastructure and public services remains to be seen.

Nevertheless, the new minimum wage is great news for those on the lowest pay.

It won’t trouble most university HR/finance departments when it comes to salaried staff – but it will likely put many a students’ union under pressure – both over some salaried staff and over the army of student staff keeping the sector’s student experience running.

There’s also plenty of subcontractors in the sector that will face sharp increases.

But it’s the interaction with student maintenance systems is where things get really interesting.

Devo-maximums

For Wales, a minimum wage increase of 6.7 per cent ought to mean that its undergraduate students will be entitled to borrow £13,736 next year for their living costs – or £17,170 for those studying in London.

That’s because Wales has been anchoring its maximum maintenance loan to the rate – and its means test only impacts the mix of loan and grant, not the headline amount that can be borrowed.

On last year’s evidence, it might not be quite that – it seemed to suggest that it takes so long to process these things, that it (conveniently) had to use a lower (earlier) estimate from the Low Pay Commission.

The more pressing issue is that the total subsidy in the loan scheme for Wales, Scotland and Northern Ireland is determined by taking the total theoretical subsidy in England’s system, dividing it by the number of people in England and multiplying it by the total number of people in Wales.

All the indications are that Wales is rubbing up against the top end of that budget – so if England doesn’t make its system any more generous, Wales might have to drop its commitment.

Ironically for a country suffering from declining participation rates, if it starts to turn that problem around, the policy of 30 weeks x 37.5 hours x NMW could be in serious trouble.

It’s only devolution comparisons that make Wales look generous – the principle of taking the number of hours that students are supposed to be studying on their course and assuming that they can’t work in those hours, loaning them that income instead, makes sense.

Although it only makes sense if 30 weeks x 37.5 hours (1,125) actually added up to 60 credits x 20 hours (1,200). And that doesn’t take into account those whose circumstances, characteristics or course don’t allow part-time work.

It’s the anchor that Ian Diamond forced through in Wales, and that Phillip Augar recommended in his Post-18 review of Fees and Finance, a recommendation that the last government didn’t even bother to respond to.

In England maintenance loans are still means tested and haven’t been rising by inflation—if there is an increase to the max, it’s hard to believe that it’ll be a 34 per cent one to match Labour in Wales.

If we accept that Diamond/Augar logic, students (undergraduate, away from home, outside London) in England are currently able to borrow a maximum of what amounts to £9.09 per hour. No wonder attendance is being hit.

And that’s the max—remember that means test sees some families (in the squeezed lower middle) having to find about £4,000 in parental contribution.

Scotland is supposed to be using the “real” living wage, on an even more dodgy anchor calculation of 25 “notional” study hours a week x 38 weeks of academic session – the Living Wage Foundation announcement of £12.60 an hours would push its max to £11,970.

That anchor was an SNP manifesto commitment, only reached this year via raising unspent subsidy by not loaning (Scottish) students anything for fees. It shouldn’t be hard to stick to that commitment.

Northern Ireland? The maximum maintenance loan there is still £5,250. No further commentary required – an absolute scandal.

Across the UK, without policy change(s), all the other student finance rates would usually rise by OBR projections for RPI – that’s increasingly pricing students out of PG study wherever they are from.

If we don’t get 2025 student finance news today in the budget, we’ll have to have it by the end of January. We’ll see.