Students stand to lose out on £1500 a year as maintenance loans fail to keep up with inflation.
The warning from the Russell Group of Universities comes ahead of an expected decision by the Department for Education (DfE) in January on how much maintenance loans will increase by in 2023/24.
Should the DfE uprate maintenance loans by the most recent projection for Q1 2024 (2.8%), a full-time student living away from home outside London will receive £9,978, leaving them £1,523 short of the £11,501 the loan would be had it increased by actual inflation since 2020/21.
The DfE’s use of projections that can be almost 2 years out of date, alongside sudden increases in inflation from factors such as the pandemic and war in Ukraine, has meant its inflation forecasts have been inaccurate in each year since 2020/21. With no mechanism in place to correct for inflation, it means a significant real terms cut has been baked into the system since 2020/21.
The Russell Group is calling on the Government to uplift maintenance loans so they reflect actual inflation since 2020/21. This change should be made in-year, ensuring swift support for students who might be struggling and ensuring loans keep up with costs.
In the longer term, the Russell Group has recommended changes to the existing system to protect students against sudden increases in inflation in future. For example, a mechanism allowing actual inflation figures to be used when they turn out to be significantly higher than the forecasts. Other measures that could help those most in need include a review of the parental earnings threshold, which has been frozen at £25,000 since 2008, meaning fewer students are entitled to the maximum level of support each year, as well as consideration to the reintroduction of maintenance grants.
Commenting, Dr Tim Bradshaw, Chief Executive of the Russell Group, said:
“Students are struggling with the rising cost of living and while our members are doing what they can to help, including investing millions of pounds in hardship support, we are concerned about the impact on students’ wellbeing and their studies.
“It’s particularly frustrating to see those challenges exacerbated by the use of a model that means students are set to be £1500 worse off next year, especially when it can be so easily fixed and it relates to a loan that is paid back by the student.
“We are calling the DfE to take this opportunity to deliver a fair deal for students and improve the system so it is fairer going forward.”
