The high price of further education: University costs up 8.7% in a year
Students are feeling the cost-of-living crisis more acutely than the average household, according to research by Interactive Investor.
Using inflation and housing rental data from the Office for National Statistics (ONS), the investment website calculated that there has been an 8.7% increase in the cost of student basics over the past year to June 2023.
The calculation is based on a mean average factoring in the rates of inflation across categories of expenditure common among students.
The figure outstrips the 2.3% rise in the maximum student maintenance loan in the 2022/23 academic year and is higher than the rate of inflation for UK households on average (7.9%).
The inflation figure for the average student factors in price changes from a list of 18 goods and services ranging from rent, food, energy, books, public transport and going out.
A report by the Higher Education Policy Institute in June found that three-quarters of students said the cost-of-living crisis was having a negative impact on their studies, with more than half (55%) taking on paid work to get by.
Another study, by PensionBee, suggested students could be repaying loans into retirement.
The biggest inflation drivers
Interactive Investor found that high energy and food bills were the biggest inflation drivers for students up 22.3% and 17.3%, respectively, ahead of non-alcoholic drink (16.9%).
The cost of student essentials also saw significant percentage increases. The cost of books rose by 14.1%, while telecoms costs grew by 9.5%.
There were also notable hikes in fares for public transport – up 6.5% for train journeys and 4% for bus and coach. However, the cost of running a car fell over the 12-month period to end of June, led by a large fall in the price of motor fuels.
The cost of going out also grew – with dining at restaurants and cafés up 9.1% over the period, while going to the cinema, theatre, concerts or sporting events grew by 4.6%.
Student loans not keeping up with inflation
With the cost of living expected to remain elevated for the foreseeable future, student loans are likely to continue to fall short of covering the uptick in living costs.
Maximum loans for living costs for new full-time undergraduate students and eligible continuing full-time undergraduate students starting their courses will be increased by 2.8% in the 2023/24 academic year.
The equivalent loan rate for students living away from home and studying in London will be £13,022; for those living in the parental home during their studies it will be £8,400 and for those studying overseas as part of their UK course, £11,427.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The increase in the maximum loan for living costs for students did not come close to cover the growth in prices over the past academic year. Many students have been forced to make further cuts backs to their typically slim budgets to maintain financial buoyancy, while some have gone a step further by taking on paid work during term time to support their studies.
“With inflation expected to remain elevated for some time to come, returning students could suffer a new wave of financial distress. For new students, it can be a baptism of fire into university life.
“At a time when MPs are debating the value of university degrees, the cost-of-living shortfall compounds the myriad of financial pressures ranging from high tuition fees and a heightened loan repayment burden that puts students at risk of being priced out of university.”
How to save money at university
The first step in managing your student finances is to establish a budget that reflects your income and expenses. Track your income and outgoings and identify areas where you can reduce spending without compromising your needs.
Look out for student deals
There are loads of deals exclusively available to students, to help make your money go further. These include discounts, free trials or buy-one-get-one-free. Make sure you get a Totum card– this will both prove your student status and get you a discount at a range of retailers.
Shop around for the best deals
Make sure you compare tariffs for broadband and mobile phone contracts. For the latter, a SIM-only deal will work out cheaper if you already own a handset.
Find a part time job
If time permits, seek part-time jobs or freelancing opportunities that you can fit in with your university schedule. Earning some extra income can significantly ease financial burdens.
Buy used textbooks
When it comes to textbooks, explore cost-effective alternatives. Consider buying used or digital versions or explore campus book.
Use less energy
Mindful energy usage not only benefits the environment but also helps lower utility bills. Turn off lights, unplug devices, and use appliances efficiently to reduce expenses.
Cancelling non-essential subscriptions, such as Netlfix, Spotify and Amazon Prime, will save money without sacrificing much.
Ask for help
Don’t be afraid to ask for support. There are advice and hardship funds are available at several universities. Students can also access cost-of-living support funds distributed by local councils to support residents struggling financially.
Read the YourMoney guide to saving money at university.