Research published in February by London Economics and Nuffield Foundation highlighted that the Treasury contributes approximately 16 per cent of the total cost of higher education provision per cohort in England, while learners contribute the remaining 84 per cent. This compares to an Exchequer contribution of 44 per cent in Wales, 51 per cent in Northern Ireland, and 113 per cent in Scotland.
At the same time, maintenance loans were increased by just 2.8 per cent in England for the 2023–24 academic year, despite inflation averaging 9 per cent last year. Northern Ireland increased maximum student loans by 40 per cent, Wales by 9.4 per cent for undergraduate students, and Scotland by 11.1 per cent for the worst-off students.
In short, students in England are making the greatest contribution for their higher education but receiving the least support whilst studying.
Regression
This is having a direct impact on provider admissions. UCAS figures published at the start of this academic year showed a decline in disadvantaged students applying to university across the country. The cost-of-living crisis has left many unable to afford rising transport, food and bills. According to research by Save the Student, the average student’s monthly living costs have increased by 17 per cent since 2022, and student food bank usage has almost doubled. In February 2023, the Office for National Statistics found that three in five students felt their loans didn’t cover necessary costs.
Against this backdrop, I was pleased to welcome colleagues from the Office for Students, Universities UK, the National Union of Students and other organisations across the higher education sector to London South Bank University earlier this year to discuss student financial support.
There was much agreement that the system is unsustainable and that, in the short term, the sector needs to engage with the Department for Education to stress the importance of increasing the value of maintenance loans with inflation.
One way in which maintenance support could be uprated immediately would be by unfreezing the lower parental earnings threshold at which learners are eligible to receive the maximum student loan. Despite increases in nominal earnings over the past 15 years, this figure has remained static at £25,000 since 2008. If it had been uprated with inflation, it would be around £36,500 (46 per cent higher) this year, making thousands more students eligible for full loans. This could potentially be funded by increasing repayments from the highest earning graduates through interest rate increases, given that the system is regressive in its current form, with students from the poorest backgrounds leaving with the highest amount of debt.
Distribution
Reform needn’t involve the Treasury simply putting more money into the system, however – there are also opportunities to better utilise existing funds. After its grant funding call for evidence closes on 23 May, the Office for Students should consider how the £1.5 billion they distribute each year can more effectively support institutions who have a greater number of vulnerable students.
Excluding funding for Uni Connect and disabled students, around £250 million goes towards supporting disadvantaged learners through the Student Access and Success Premium. However, the way these allocations are currently calculated – ignoring numerous students characteristics that are known to affect attainment – means that this funding is spread too thinly to be truly effective.
Some 7.8 per cent of the least deprived quintile of students (Index of Multiple Deprivation quintile 5, or IMD5) fail to complete their qualification – but that figure jumps to 18.5 per cent for students from IMD1 backgrounds, the most deprived. As well as leaving disadvantaged learners behind, this has a long-term impact on the sustainability of the student finance system and leaves taxpayers picking up the cost. Providers who are performing particularly well in this and similar metrics should be recognised and supported accordingly.
Across the sector as a whole, universities have, on average, 17 per cent of students that were eligible for free school meals and 31 per cent from IMD1 and IMD2 neighbourhoods. Why not then set a stretching baseline above these figures, coupled with outcome targets, which institutions must meet in order to qualify for the Student Access and Success Premium?
Investment
In the absence of increased real-terms funding from the DfE and OfS, it is worth exploring which other stakeholders – particularly those who benefit from a highly educated population – could contribute. Employer investment in skills is already half the EU average and there has been a 26 per cent drop in employer investment in training since 2005. Businesses should not be able to take further advantage of state and individual investment into a skills system of which they are one of the main beneficiaries.
Either directly through a similar mechanism to the apprenticeship levy, or indirectly through a corporate social responsibility system which would allow them to make tax deductible contributions, employers should be expected to stake a greater contribution to the system.
Providers should also be expected to do more within existing parameters. Higher education students are not one homogenous group – many have caring responsibilities, are disabled, and/or have long commutes to campus. HEIs should revisit how they assess student need so that they understand the individual requirements of students and offer tailored support, rather than making assumptions based on demographics.
The rollout of the Lifelong Learning Entitlement later this decade may present a challenge as students begin to move between institutions haphazardly, but this could serve as an impetus for providers to adapt aspects of their delivery and focus resources on continuous programmes of advice and guidance so that learners are more adequately able to make informed decisions about the skills they require.
Perceptions
Finally, it is also worth noting that potential antidotes to the current situation will achieve limited success unless the broader perception of student hardship is changed.
Despite more than two in three students undertaking part-time work on top of their studies, student poverty is seen as an acceptable form of suffering by much of society, with struggling to make ends meet and “living off beans on toast” often trivialised as a rite of passage for learners. It is inconceivable that comparable sentiment would be expressed toward any other demographic.
The sector must unite to shift these optics.
The article is overstating how much resources are potentially available from targeting the student premium on providers with high levels of FSM and students from economically disadvantaged areas given that the full-time student premium was £154 million in 2023/24 (rather than £250m).
Moving funding from providers with a lot of students with lower entry qualifications (the current methodology) to providers with a lot of FSM students from economically deprived areas (the proposed methodology) would also be a zero-sum game – it would be interesting to see who the winners and losers would be from that proposal…
I am also not clear what the benefits would be of linking funding to qualification completion given the administrative challenges: students are already not funded if they do not complete the full year of study and the OfS ensures that student outcomes are satisfactory via the regulatory framework.
Peter, the full-time and part-time premium combined are £221 million for the 2023-24 academic year. Even if looking at the just the £154m for full-time students alone, this remains a substantial sum. Local distribution to target groups I think provides more effective means to target support to students but this could be better if the national mechanism of distribution was better aligned with need. If I were allocating £154m, I wouldn’t think it unreasonable to ask institutions to articulate how that funding is to be spent and the impact measured based on what’s achieved – the APP seems a good place for this. Indeed, if as a sector we don’t evidence impact I suspect this funding will continue to decline.