Student loans fail to keep pace with inflation
According to research carried out by interactive investor, students heading to university in September face a 9% annual increase in basic living expenses.
For students living in private rented accommodation the overall rate of inflation is 12% as landlords hike rents to cope with more expensive mortgages.
Soaring energy bills are the biggest inflation driver, up 70% over the past 12 months.
The cost of running a car is up 21% year on year, reflecting the rising cost of fuel, and the cost of going out also surged as going to the cinema, theatre, concerts, sporting events and dining at restaurants and cafés has got between 7% and 17% more expensive than last year.
Takeaways also got pricier, up 10%, the cost of food jumped by 8% and train prices by 5%. Books, a student staple, saw a more modest uptick of 3%.
Meanwhile, student maintenance loans have failed to keep up with rising costs with students studying in England able to borrow just 2.3% more in the coming academic year than last.
The loan, which covers living costs and is separate from student loans to pay for tuition fees, has risen from £9,488 to £9,706 for students going to university or college in England but outside London.
That compares with inflation hitting student basics up by 8.9%.
Alice Guy, personal finance expert at interactive investor, said for many students the significantly higher cost of living will mean choosing between heat and food this winter.
“Student households are likely to find it tougher than most as they have limited disposable income and spend a large proportion of their budget on essentials with little wriggle room,” she said.
Myron Jobson, also a personal finance expert at interactive investor, warned: “The sheer scale of inflation will be a rude awakening for new students, and with the Bank of Mum and Dad also facing its own cost-of-living challenges, it can’t be relied on to offer financial support.
“No student should have to worry unduly about their financial situation while they are focusing on their studies, but the reality is a large number will need to work part time to support themselves.”
ii’s analysis found the extent of the cost-of-living squeeze varies by living arrangement.
Those living in purpose-built student accommodation offering rent inclusive of utility bills won’t be immediately hit when the energy price cap rises in October, but students living in private rented accommodation are likely to see energy bills soar.
How to minimise higher costs as a student
- Budgeting is integral when it comes to keeping your financial house in order. It allows you to plan how much you will spend or save each month as well as track spending habits. There is a plethora of budgeting templates available for free online as well as apps to help you on your way. The rising cost of living means we are saving less to maintain current levels of spending, so be prepared to make tweaks to your budget as inflation continues to rise.
- There are loads of deals exclusively available to students, to help make money go further. Available student discounts are not always made obvious by companies, so ask the question.
- Save on food bills by shopping around for the best deals – especially for high ticket items. Even simple things such as opting to purchase a store brand equivalent of traditional larder products can help to cut down the cost of groceries. It is also worth taking advantage of supermarket loyalty schemes – such as Tesco Clubcard and Nectar card – which can give you access to unlock big discounts and other exclusive rewards.
- You won’t know whether you are paying over the odds for things unless you shop around for the best deals. For example, if you’ve been with a broadband provider for a while, it is likely that any introductory offers will have expired, and you might be paying more than you need to. The same goes for mobile phone contracts. Shop around to see if you can get a better deal.
- Students struggling financially needn’t suffer in silence. Don’t be afraid to ask for support. There are advice and hardship funds are available at most universities and additional funds for those who need extra financial help as well as for students with children or dependent adults and students with disabilities. Students can also access cost-of-living support funds distributed by local councils to support residents struggling financially.