Why Maintenance Loans – Not Tuition Fees – Are The Real Financial Crisis For Students

Tuition fees have become big news in recent weeks.

From Jeremy Corbyn’s vow to scrap them if he won the General Election to Damian Green’s call for a “national debate” on the issue, the controversial fees have been a hot topic on both sides of the political divide.

And, it would seem, with good reason – an IFS report released last week found that the poorest students are set to leave university with debts of £57,000, while more affluent graduates can expect to hand over £93,000 in repayments over the course of their lifetime.

But many believe that it is maintenance loans – not tuition fees – that pose a real financial crisis for students, with many struggling to pay for rent, books and even food while at university.

So is it time for a shift in the debate?

Students and experts are now arguing that maintenance grants are the real issue when it comes to paying for university

Provided by the government, maintenance loans are offered to students to cover rent and living costs while at university.

However, as the means-tested loans are based on parental income, the amount offered varies wildly between students.

An 18-year-old studying outside of London from a family with a household income of less than £25,000, for example, would receive £8,200 a year in maintenance loan – the maximum amount offered.

But a student in identical circumstances whose parents earn more than £62,180 would receive £4,379 less, with the government providing the minimum loan of £3,821.

This huge gap can create significant financial problems for students – especially for those who don’t want to ask their parents for a handout or whose families can’t afford to make up the gap.

Even those from families who earn less than the national average can be significantly affected – a student whose parents take home just £21,000 a year each could see their loan fall £1,766 short of the maximum.

While students in London are offered larger loans to cover higher accomodation costs, they are also calculated on a sliding scale based on parental income.

Jake Butler from money website Save The Student (STS) said that “pitiful” loans are affecting students’ grades, diets and mental health.

“Maintenance loans are a much larger issue than tuition fees,” Butler said.

“The press and the papers like to jump on tuition fees because they’re a huge cost, but there is an understanding across the board that a lot of graduates are never going to pay that back,” he continued.

70% of students surveyed by Save The Student said their maintenance loan didn’t cover their living costs

“But if you look at how students are affected by finances on a day to day basis, it is by living costs and I think that that’s obviously to do with the maintenance loan.”

The STS 2016 student money survey found that 70% of the 2,000 people questioned could not afford to live on their maintenance loan, with the average shortfall coming in at £250 a month.

While some students told researchers they were living off just four or five meals a week, others said they had considered dropping out of university altogether.

“Around 75% are relying on part-time student job,” Butler continued.

“You could say ‘Fair enough – you should be funding your own degree.’

“But I know a lot of students are putting too many hours in and its affecting their grades.”

STS research found that some students are working up to 40 hours a week in multiple part-time jobs to make ends meet.

“Many students really are struggling to live a ‘normal’ life because the maintenance loan isn’t covering their costs,” he added.

Although rent differs hugely between cities, in many places it far outstrips the minimum maintenance loan of £3,821.

While the average cost of self-catered accomodation at Manchester University is £4,995 (40 week lease), students at the University of Birmingham can expect to fork out around £5,880 for a room in halls (42 weeks).

Meanwhile, Brighton University undergraduates are charged up to £6,084 for a self-catered room over the course of a 39 week contract.

Many students cannot even cover the cost of their rent with their maintenance loan

Beth Reed, who studies history at the University of Lincoln, was forced to ask her parents for £200 a month because her maintenance loan didn’t cover the cost of her rent.

“Without my parents’ help, I wouldn’t have been able to live,” the 21-year-old, whose father was made redundant while she was studying, told HuffPost UK.

“But I was stressed about the fact that my parents were giving me money when I knew that they had their own things to pay for.

“It makes you feel guilty.”

The expense meant that the family were no longer able to afford holidays abroad and were forced to delay repairs on their home.

“We have a leaky window that we had to get sealed because we couldn’t afford to buy a new one,” Reed continued.

“My parents had my sister’s wedding to pay for too and now my other sister’s wedding, so I won’t be getting any money from them next year.”

Food science student Charlotte Eady, who is in her second year at the University of Nottingham, found herself in a similar situation.

Her maintenance loan was £600 less than her rent for the year, meaning she too had to turn to her family for help.

“It seemed unfair that I should have to find the money elsewhere to pay for somewhere to live – never mind other daily necessities like food,” she said.

Students from low-income homes fare little better, an IFS report released last week found.

While they tend to have more cash-in-hand at university, George Osborne’s decision in 2015 to scrap maintenance grants in favour of loans means they are now graduating with debts of £57,000 – £14,000 more than their wealthy classmates.

“Something needs to change,” Butler added.

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