Student finance is at crisis point in the capital

Let’s look South. A month or so ago, as a tease for its work on a minimum income for students, the Higher Education Policy Institute published Savanta polling on students’ thoughts on the cost of living crisis.

Nearly three-fifths of students reported that their financial situation had worsened over the last year, a third were at risk of dropping out, more than half said money had affected their mental health, and only a third of English students thought the maintenance support system was fair.

Alongside the headlines, it published the full cross-breaks – and while relying on the numbers gets trickier once you’re drilling down by region, there is a scary set of differentials when we look at what students studying in the capital are saying.

And they’re even more concerning when you note that the sample of students surveyed in London were less likely to be from skilled manual, semi-skilled / unskilled or state benefits-reliant household than the average.

Students in London were 8 percentage points more likely to have missed out on social experiences over cost concerns, and 12 pp more likely to have canned off extracurriculars for the same reason.

Drop-out risk outside of London was 27 per cent – rising to 49 per cent in the capital – and co-curricular opportunities like internships or departmental research opportunities saw a 16 pp differential. Students in London were also 12 pp more likely to find travel to work a challenge.

The good news for universities in London is that students there were both more likely to ask for help, and be confident that they’d get it – but there’s only so much that universities can, and will continue to be able, to do.

A key component for lots of students in the capital is the cost of housing – and since 2021, Mayor Sadiq Khan’s London Plan has supposed to be helping to ease things by putting a planning restriction in on new Purpose-Built build.

Policy H15 required that future developments provide as many affordable beds as possible, with a minimum target of 35 per cent, where rents for these beds can’t exceed 55 per cent of the maximum London student loan.

More than 50 per cent of beds have to be contracted under a nomination agreement with universities, and developers were allowed to enhance profitability through commercial summer lets and other “meanwhile uses”.

The problem is that choking we’ve seen on the maximum maintenance loan. Not only is the failure to uprate it for inflation a problem in and of itself, it’s been stymying the deals that need to be done on new build – with new research by real estate firm CBRE and QX Global suggesting that it has failed to stimulate new bedspaces, with only 3,100 affordable beds securing planning consent since the plan was launched.

That puts quite a bit of pressure back on Sadiq Khan – who has been consulting on revised purpose-built student accommodation guidance since January.

The official position from the Mayor is as follows:

Students are often some of those at the sharp end of a national cost-of living crisis and through his London Plan, Sadiq backs discounted affordable student accommodation in new developments which cap rents at levels linked to students’ maintenance loans for living costs. In 2021 and 2022 the mayor approved the most affordable student accommodation in a decade, supporting the need for more student homes in the city.

It’s a classic catch-22 this – supply not meeting growing demand should see rents rising, universities won’t have been especially keen to underwrite nominations agreements amid all the international uncertainty, and the developers (and those that advise them) are naturally calling for the affordability requirement to be watered down.

Both the Conservatives and Labour are likely to go into the election promising to get more houses built in general – but neither ever have anything meaningful to say on student housing.

The chances of joined-up thinking between whatever DLUHC is renamed to and DfE – of the sort that former universities minister Chris Skidmore was proposing before he was reshuffled after the last election – are slim.

And there’s a danger that a landlord sector breathing a sigh of relief over the disappearance of the Renters (Reform) Bill is quickly converted into a panic if Labour picks up the bones of that bill and runs with it early – a bill that never really properly considered student housing issues at any point in its development or debate.

That just leaves raising the maintenance loan even further – which also looks unlikely. And should there be an easing off on hostility towards international students, both availability and pricing of student housing are likely to be issues that get worse in the next Parliament.

Full-blown crises across Europe have caused rear-guard government action of varying sorts – Sue Grey would be advised to add students sleeping in libraries and cars to her “Shit List”.