Student costs have been rising. Have bursaries been rising with them?

Labour’s confirmation at its party conference that it intends to retain its commitment to a “genuine” Living Wage could have major implications for student finance.

As it stands, the “National Living Wage” (a rebadged National Minimum Wage) is determined off the back of a recommendation by the low-pay commission. Unlike the “Living Wage” from the foundation that shares its name, it doesn’t take into account the rising cost of living.

The anchoring of student finance entitlements to the NLW has nevertheless seen students from Wales on a much higher core entitlement to maintenance loans than counterparts, as we’ve discussed on the site before – we’re heading towards a £2.5k difference this time next year.

If an incoming Labour government was to switch to the Living Wage as its basis, that would have resulted in the core (away from home, not London) headline amount this year for students from Wales at £12,263 – a £543 uplift, and some £2,285 more than the poorest students from England can pull down this year.

There are implications in Scotland too. The SNP’s manifesto commitment was to reach the minimum wage “anchor” by the end of the parliament – as we discussed here, it’s still some way off from getting there.

It intrudes on the little things we love

What this all does is remind us of how important it is – and certainly has been recently – to attempt to anchor the amount of money that a student can get (or borrow) to the costs that they face.

Reliable data on that is hard to find – partly because the governments in England and Wales appear to have commissioned a dedicated student income and expenditure survey in 2011 but (if it was actually completed) have been sat on the results ever since.

If Labour in England ever get a maintenance commitment out of the door, it would be wise to find an anchor like the Living Wage Foundation’s calculation – and preferable for it to ask the foundation to run a related and dedicated annual exercise on student costs, given the way in which things like rent or food inflation can outpace headline figures.

The central problem in the English system in recent years has been the OBR’s inflation projections (which are used to calculate maintenance increases) repeatedly being wrong, coupled with a refusal to raise the threshold over which the amount ticks down – stuck at £25,000 since 2008. That threshold should be reviewed and increase with earnings, while the amounts should increase with (ideally student) inflation.

That’s reflected in the Russell Group’s position on the issue. Commenting on its students’ unions’ finding that 1 in 4 students regularly go without food, rising to over 3 in 10 for students from the most socioeconomically disadvantaged backgrounds, it said:

…(we are) calling on the government to increase student maintenance loans in line with inflation since 2020/21, consider the reintroduction of maintenance grants to support the most disadvantaged students, and to review the parental threshold for maximum loan support, which has been frozen since 2008 despite average earnings increasing significantly.

2020 does feel like a long time ago. If we just look at CPI (and that excludes housing costs), there’s been a 21 per cent increase in the price of things since then. There’s also been an increase in pay which will be impacting entitlements against the household income thresholds – albeit it not at the same rate as inflation.

Whittles away at our joy

But this isn’t just about what governments do. Back in 2019 when universities in England were submitting their new longer-term Access and Participation Plans to the Office for Students, they also will have been oblivious to the inflationary pressures coming that have impacted on students from poorer backgrounds.

That might have prompted its members to respond to the crisis in the same way that it demands the government does. So given the Russell Groups’s particular concerns around the entitlements and the thresholds, I thought I’d look at the core bursary offer from each of them in England to see if anything has changed.

Not a lot has.

In the chart at the bottom, you’ll find the headline bursary offer both for undergraduate entrants in 2020 and for this year. I’ve not included Oxford or Cambridge as there’s a mountain of complexity there, and there are obviously all sorts of bits and bobs floating around these in terms of hardship funds and other schemes.

In thirteen of the eighteen examples, there’s been no changes at all – both the thresholds and the entitlements are the same as the day that send was pressed on the submission. UCL has increased its entitlements, Durham has increased entitlements and thresholds, others have smoothed some entitlements up the income scale, and two others have actually reduced support for the lowest income students.

So for a family with a household income of £24,000 in 2020, a mean average across the group would come out at a bursary of £1,935. If we then apply earnings growth to that family income, the equivalent would be £28,620 – and if we apply inflation to the entitlement, they ought to be getting £2,341. But in fact with that earnings increase, this September they’d actually have been entitled to an average bursary across the Russell Group of £1,327 – a significant £1,014 shortfall.

Alternatively, we could take a family on a fairly modest £29,000 in 2020. That would have generated an average bursary across the group of £1,330. The equivalent today given the earnings growth would result in a bursary of £625 – a shortfall of £984 when compared to the inflationary pressures on the spending of that bursary.

Where there is change, there is also possibility

Of course what we can’t see is how the profile of that spend might have changed, how successful those providers have otherwise been in relation to their low-income background targets (this monitoring exercise page on the OfS site is due an update) and how much money those providers are spending this year against their budgeted intentions. And it’s also the case that there’s been no additional money in the tuition fee to spend on those students.

But at the same time, whatever research was carried out on the needs of low-income students back in 2019 – which presumably helped set those bursary levels – must surely be out of date now. Maybe the widespread freezes aren’t making anything worse on non-continuation – but they’re almost certainly impacting meaningful participation in student life, where students live and so on. Let’s hope that access hasn’t stalled or worsened across the group, and let’s hope that it’s not possible to link that to underspends on access and participation.

Ideally, we’d reform our maintenance system such that regardless of where the money comes from, we can establish a decent and meaningful bottom line income figure that students of multiple types in multiple areas need to enjoy what Keir Starmer described in his speech as “the freedom to enjoy what they love – more time, more energy, more possibility, more life.”

In the absence of any other anchors, I’d go for the Living Wage one of £12,263 – with amendments for region, living status and family nationally, and more granular additions in bursaries from universities to address local issues.

But regardless, what OfS must avoid at all costs is allowing universities to submit and have approved Access and Participation plans in the next year where their student financial support entitlements and thresholds are set in half a decade’s worth of aspic. The sector wouldn’t treat its staff that badly – and the Russell Group in particular shouldn’t treat its lowest-income students that badly either.