Student maintenance loans in England will go up by 2.8% next year, the government has confirmed, despite soaring inflation and mounting concern about the impact of the cost of living crisis on students.
The increase, announced on Wednesday, was greeted with dismay by those in the sector who described it variously as “disappointing”, “woefully inadequate” and a “devastating blow” to struggling students.
The government also announced an additional £15m for university hardship funds, but with just under 2 million undergraduates in the UK, student money experts calculated it would amount to less than £8 a person.
The Russell Group of universities warned earlier this week that students would lose out on as much as £1,500 a year if maintenance loans – which students take out to pay for living costs – failed to keep up with inflation. With a 2.8% increase, a full-time student living away from home outside London will receive £9,978 in 2023-24 – £1,523 less than the £11,501 they would get if loans increased in line with inflation, it estimated.
Dr Tim Bradshaw, the chief executive of the Russell Group, said: “It is disappointing that the Department for Education has failed to deliver a meaningful increase to maintenance loans or take the opportunity to address some of the flaws in the forecasting process to ensure they keep up with rising costs.”
The government said the additional £15m built on the £261m it gave to the Office for Students (OfS) for 2022-23, on which universities can draw to boost hardship funds. Tuition fees will also be frozen at a maximum of £9,250 for the next two years.
Robert Halfon, the minister for skills, apprenticeships and higher education, said: “We recognise students continue to face financial challenges, which is why we are increasing loans and grants for living and other costs for a further year.”
Save the Student, a student money website, calculated last year that the shortfall between the average maintenance loan and the average cost of living was £439 every month – an increase of £99 on 2021, and £216 on 2020.
Tom Allingham, of Save the Student, called on the minister to review his decision. “The 2023-24 maintenance loan rates are a devastating blow to struggling students, who will now see their battle with the cost of living crisis intensify next year.
The NUS vice-president for higher education, Chloe Field, added: “The 2.8% increase in the maintenance loan for 2023-24 is woefully inadequate and will leave students over £1,500 worse off than they would have been if student support was tied to inflation.
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The Institute for Fiscal Studies says if current forecasts prove correct, this latest increase – in contrast to the last two adjustments – is likely to be close to actual inflation. The key issue, however, is that the government has not corrected large cuts made over the past two years due to forecast errors.
Ben Waltmann, a senior research economist at the IFS, said: “The most important part of today’s announcement is that the government has allowed the large cuts to student support since 2020-21 to become baked in. This mean that merely due to inflation being higher than forecast, students from the poorest families will be entitled to £1,500 a year less in maintenance loans than if inflation forecasts had been correct.”