Category: student finance

  • Graduates are paying more and getting less

    Graduates are paying more and getting less

    There’s an absolutely jaw-dropping passage in this year’s IFS Annual report on education spending in England.

    In total, we now estimate that under current policy, the long-run cost of issuing loans to the 2022–23 starting cohort will be negative (–£0.8 billion), with graduates repaying more than they borrowed, when future repayments are adjusted for inflation.

    In other words, we’ve gone from government suggesting that the state would subsidise undergraduate student loans by about 45p in the pound, to making a profit on them for that cohort.

    Put another way, we’ve stealthily moved from a £4,950 (graduates) £4,050 (state) cost sharing arrangement in the headline tuition fee to a £9,606 (graduates) -£356 (state) split for that 2022 cohort.

    “Tuition fees almost doubled in a decade on average” is not the story that universities tend to tell. But it is, according to the IFS, the reality.

    Floods of tears

    I like to think of the English student loan system as an onion with several layers, all of which make people cry.

    On the surface there’s the headline fee, even though you might not pay that in the end. Below that there’s the “debt” figure that appears on your student loan statement, which is impacted by interest. You may well not pay that either, because student loans are written off after a certain number of years.

    What really matters – several layers down – is the repayment terms. And that 2022 cohort have been double whacked.

    Back in 2022, then universities minister Michelle Donelan announced a response to the Augar review, in which she was “delighted to announce” that she would deliver the Conservatives’ manifesto commitment to address the interest rates on student loans by reducing it to down to inflation only.

    To pay for that reduction in eventual repayments, the new “Plan 5” was only going to write off loans after 40 rather than 30 years, and the repayment threshold would be set at £25,000, rising with inflation from April 2027 onwards.

    But for 2022 starters on the old Plan 2 – the ones with interest rates at RPI-X plus 3 per cent – she also announced a decision to hold the Plan 2 repayment threshold at £27,295 until April 2025.

    Fixing the threshold in cash terms was going to pull more borrowers into repayment and increase repayments year by year, which at the time the IFS said would mean nearly all borrowers would lose from the reform, with graduates with middling earnings set to lose the most:

    And on the Plan 5 changes, the IFS said that cutting the repayment threshold and then freezing it (and changing how it is uprated thereafter), extending the repayment term from 30 to 40 years, and cutting the interest rate to inflation only would result in graduates with lower-middling earnings losing the most, while the highest earners would gain substantially:

    The changes were, in other words, both stealthy and regressive.

    The Pink Panther meets reverse Robin Hood

    In 2022, Labour’s then Shadow Secretary of Education, Bridget Phillipson, said:

    The Tories are delivering another stealth tax for new graduates starting out on their working lives which will hit those on low incomes hardest.

    In her September 2023 speech to Universities UK conference, she said:

    …student finance will be the first to see change, although by no means the last. We have been clear about that from opposition and we will be clear about that from power.

    She was concerned about distributional impact:

    The Tory changes which bite a first cohort of students this autumn are desperately unfair. More unfair on women. More unfair on low earners. More unfair, not just for a few short years, but all through a generation of working lives, with higher loan repayments eating away at pay for young graduates just as they’re starting out on their working lives, and deterring older learners from retraining or upskilling.

    And we got commitments on change, and the speed of that change:

    Future nursing graduates repaying about £60 more a month. The Tories’ choices are hammering the next generation of nurses, teachers and social workers; of engineers, of designers and researchers. It’s wrong. It’s unsustainable. And it’s going to change. And why I tell you today that the next Labour government, whenever it is elected, will move swiftly to right these wrongs.

    In an interview with the Telegraph on 7th October 2023, she doubled down – saying that the new system is “going to become more regressive for lower middle earners” and:

    …is not a sustainable system… we will have to confront that if we win the election.

    And then on BBC Question Time in May 2024, she said:

    I am determined that we can deliver a more progressive system without any more spending or borrowing.

    But rather than deliver on that raft of promises, they’ve done the stealth and regressive thing again.

    Blink and you missed it

    Buried in the Budget in November, chancellor Rachel Reeves announced a freeze in the Plan 2 repayment threshold – it is to be frozen at its April 2026 level (£29,385) for three years.

    There’s been a dribble of political press coverage ever since, focussed mainly on the plight of young graduates and the rise in the minimum wage eroding the graduate premium.

    But (as the IFS point out in their annual report), something else was hiding. As well as the repayment threshold, Plan 2 interest-rate thresholds (the lower and higher thresholds that determine whether interest is charged at RPI, RPI plus 3 per cent, or a sliding rate between) are also to be frozen for three years for Plan 2 grads, at their April 2026 levels (£29,385 and £52,885).

    This was not mentioned at all in the Budget document or speech, but did appear deep in OBR costings – and was subsequently confirmed to the IFS.

    For that 2022 cohort, it means many more borrowers can expect to make repayments for longer, and an increase in the interest accrued. And the IFS says that the latter will have nearly as substantial an impact on lifetime loan repayments as the repayment threshold freeze, and will affect a different set of borrowers.

    Here’s how the IFS calculate the distributional impacts of the changes for that 2022 cohort:

    I’m not sure I could have invented a stealthier, or more regressive change if I tried.

    One thing I note in passing is that the changes to both Plan 2 and Plan 5 are usually accompanied by an equality impact assessment – that hasn’t appeared at all – and the changes to Plan 2 are actually in theory joint changes that require both Welsh and English ministers to lay them jointly.

    Not only has the secondary legislation not appeared, there’s no word yet on whether Welsh ministers are accepting them. And if and when we do get that EIA, let’s not expect much light – given that DfE doesn’t even bother to break down estimates of loan borrower numbers by the rate of interest paid.

    It couldn’t be, could it, that a Treasury desperate to make its excel sheets add up having ruled out income tax increases just decided at the last minute to raid the budgets of Plan 2 graduates in the hope that nobody would notice? Could it?

    The student interest (rate)

    Of course being less “stealthy” does require someone to peel back the onion layers – never the Treasury’s strong suit – and pretty much the only opinion in the Gordian knot on making changes that are less regressive involves higher interest rates. It’s only by asking both Plan 2 and Plan 5 high-earning graduates to pay back more (by paying their “graduate tax” for longer) that you can do it.

    But the political problem of increasing interest rates is significant – because everyone hates interest, especially when it adds to that (often irrelevant) balance figure. And because the system is still labelled as a loan and sold as a loan, and because therefore people assume (hope?) they’ll pay it back some day, more interest sounds bad.

    For that Plan 2 mob, if government had just whacked interest up to a gazillion per cent, all of them would be paying graduate tax for 30 years – with only the most successful graduates paying more. But in that “it’s a bit like a loan and it’s a bit like a tax” dance, tilting the see-saw towards loan will always mean it ends up more regressive.

    In a debate just before Christmas on student loans, Treasury minister Torsten Bell said that there had been a “cross-party consensus” that a fairer system of university funding will require a “lower net contribution to universities from the taxpayer”.

    In 2025, 34 per cent of loan debt for full-time plan 2 graduates was forecast not to be repaid, so what we are talking about is still substantive.

    The Department for Education’s calculation of the RAB charge differs a little from the way the Treasury calculates the subsidy in the accounts every year, and both differ a little from the way the IFS calculates things.

    But Bell was actually referring to the tiny number of students left getting a new Plan 2 loan this year. And at what point has there been a “cross-party consensus” that the subsidy for 2022 entrants should be minus 4 per cent?

    More importantly, why on earth should students who are paying more but getting less be expected to fund the raft of public “goods” expected from their private debt, when the only contribution the state will make for that cohort is running the loan scheme?

    That’s livin’ all wrong

    Elsewhere in the report, there’s analysis on the international levy and the proposed maintenance grants, and a pretty shocking graph on the decline in maintenance loan entitlements per year by household income:

    The upshot there is that despite the government trumpeting that maintenance would be index-increased along with fees, by 2029–30 IFS expects that some students – those with household residual incomes of between £23,400 and £61,400 – may be able to borrow less in real terms than they would be entitled to this academic year, with the largest falls of over £1,100 (around a sixth) for those with household incomes of around £53,000.

    That’s the refusal to uprate the household income threshold since its announcement in 2007 – which will see fewer and fewer students getting the maximum loan as the Parliament continues.

    (Astonishingly, the government’s guidance for the 2025-26 iteration of the Turing scheme now defines “students from disadvantaged backgrounds” as someone with an annual household income of £35,000 or less, up from £25,000 last year. They’d have to be able to afford to participate HE in the first place, mind)

    I’ve not rehearsed here the stealthy abolition of the protection you currently get on the parental contribution when more than one child is in higher education, the miserable state of PG loans (both in repayment and value terms), the shocking state of the level of support for student parents, the slow shift of DSA onto universities’ budgets, the shameful way we treat those on universal credit that are in full-time education, or the ways in which this reduction in the spending envelope will impact the “equivalence” envelope for the loans systems in devolved nations.

    But I will rehearse how far Labour has fallen on student financial support.

    Those were the days

    In January 2004, partly to sweeten the pill over proposals to raise fees to £3,000, then Secretary of State for Education and Skills (Charles Clarke) announced a new package of student finance to ensure that “disadvantaged students will get financial support to study what they want, where they want”.

    From September 2006 there were to be new higher education grants – and maintenance loans were to be raised to the median level of students’ basic living costs as reported by the student income and expenditure survey – to ensure that students have “enough money to meet their basic living costs while studying”.

    The aspiration was to move to a position where the maintenance loan was “no longer means-tested” and available in full to all full-time undergraduates, so students would be treated “as financially independent from the age of 18”. Graduates were to get the optyion of a repayment holiday to ease the burden as they moved into the labour market. And the new Office for Fair Access was to be required to issue additional bursaries to students.

    By July 2007, the then new Secretary of State for Innovation, Universities and Skills, John Denham, went further with new reforms to support for (undergraduate) students in higher education (from England) – to recognise that hard-working families on modest incomes had “concerns about the affordability of university study”.

    The rhetorical flourishes are all pretty similar to those we hear today – but we should, for the sake of argument, look at what has happened since. Even though by the time the changes were implemented the SIES data was a few years old, at least the “we’ll fund basic living costs” principle was there.

    In 2007 DIUS ministers had not been able to persuade the Treasury to abandon means testing – but full grants were to be made available to new students from families with incomes of up to £25,000, compared with £18,360 – along with minimum £310 bursaries from higher education institutions.

    The announcement was accompanied by a document with some handy case studies – Student A, whose parents who had a combined household income of £50,000 and who had a brother who already studying at university; Student B, from from a single parent family with a household income of £20,000; and Student C, living with both parents who had a residual household income of £25,000.

    Here’s what they were entitled to at the time (away from home, outside of London):

    Student A Student B Student C
    Household income 50000 20000 25000
    Grant 560 2825 2825
    Loan 4070 3370 3370
    Guaranteed bursary 310 310
    Total 4630 6505 6505

    That £25,000 household income threshold hasn’t moved since, there’s now no grants (and the ones that are coming derisory), nobody’s guaranteed a bursary (and most universities are reducing their spend on bursaries) and both prices and incomes have risen since.

    So to see how far things have fallen, let’s see what those three students were entitled to last year. Student A’s parents now earn around £83,500; Student B’s single parent family now earns around £33,400; and Student C’s parents earn around £41,750.

    Student A Student B Student C
    Household income 83500 33400 41750
    Maintenance loan 4767 9497 8035

    Now let’s adjust those totals to 2008 prices (RPI) to look what what they’re worth:

    Student A Student B Student C
    Maintenance loan 2569 5117 4330

    And let’s do the comparison in 2008 prices, which shakes down as follows:

    Student A Student B Student C
    2008 4630 6505 6505
    2024 2569 5117 4330
    Inc/Dec -2061 -1388 -2175
    -45% -22% -34%

    Finally, let’s take HEPI’s minimum income standard from 2024 as a way of judging the gap between state (loan) support and what students need – the implied parental/part-time work contribution – we can see the problem in another way as follows (all figures adjusted for 2024 prices via RPI):

    Student A Student B Student C
    2008 £10,040 short £6,561 short £6,561 short
    2024 £13,865 short £10,135 short £10,598 short

    Why are two-thirds of students working? Why is attendance becoming so hard to secure? Why are mental health problems rocketing? Why are more and more students choosing to live at home, restricting their subject and institution choices? Why is youth despair at record levels? Sometimes the answers are pretty obvious, really.

    Levelling down

    Why is all of this happening? An observation on borrowing, and two final graphs from the IFS report tell the real story.

    First, borrowing. Back in 2021, when the government borrowed money on the bond markets to fund student loans, it could do so very cheaply in real terms because interest rates were low and inflation was expected to be higher – so investors were effectively accepting a loss after inflation.

    In practical terms, markets were willing to pay the government about 1.4 per cent a year, after inflation, just to lend it money.

    But today – mainly because Germany is now back in the borrowing game – the situation has reversed. Interest rates on long-term government borrowing are much higher, while expected inflation over the same period is lower, so borrowing now costs the government money in real terms.

    Using the same measure, the government is now paying investors roughly 2.3 per cent a year, after inflation, to finance new student loan borrowing. The swing from a negative to a positive real cost is large, and it materially changes how expensive student loans are for the public finances – just not in way that is especially (or, in fact, at all) transparent.

    And then there’s the IFS education spending squid:

    To be fair to ministers, it’s true that the research says you can make the most difference on life chances by investing in early years. Substantially, coupled with investment in NEETs and those in further education, we are seeing ministerial priorities manifest over time:

    But none of the research that underpins those priorities weighs up cutting the spend on HE to fund everything else, which will mean spend per student will soon be just 44 per cent greater than primary school spending per pupil, having been almost four times greater in the early 1990s.

    More importantly, there simply hasn’t been a proper debate about the share of that blue line that should be paid by the state versus the share (eventually) paid by graduates since the grand promises of the early 2010s.

    We now, by some very substantial measure, have easily the most expensive state higher education system in Europe from a student/graduate point of view – a system which see the recipients paying more and more, getting less and less, and having less money (and therefore time) to participate in what’s there – resulting in worse educational outcomes (as measured internationally), and worse mental health.

    And it’s a system in which, thanks to graphs like this and the regressive nature of the loans changes described above, where distributionally, the losers are also those least likely to benefit from the great boomer wealth transfer that is coming in the next decade:

    Add it all up, and it means that the role that higher education once thought it played in social mobility is pretty much dead. From here, talk like that I’ll be an angel then things can only get worse.

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  • Why the LLE may not radically reform tertiary education — and how it might still move the dial

    Why the LLE may not radically reform tertiary education — and how it might still move the dial

    Picture two people you probably know. Amira works in a GP surgery and wants to move into health data. Ben’s a video editor who keeps bumping into AI tools he doesn’t quite understand.

    The Lifelong Learning Entitlement (LLE) looks built for them: pay per credit, learn in chunks, fit study around life. It’s a real step forward. But a finance switch rarely rewires a whole system. Who recognises learning, who lets you progress, and who supports you while you study still decide who actually gets through the door.

    In simple terms, the LLE funds learning at levels 4–6 (from Higher Nationals up to bachelor’s) and lets people use an entitlement over time (currently up to age 60). Providers are paid per credit. Early emphasis is on areas with clear employer demand (for example computing, engineering, health) and on Higher Technical Qualifications. Funded modules typically need to be at least 30 credits, assessed, and housed inside an approved “parent course”. Subjects are tagged using a national list (HECoS), and modules are expected to align with the parent course’s main subject tag – a guard-rail that ties funding to real, quality-assured programmes.

    Money fix won’t deliver system fix

    Being able to pay isn’t the same as being able to progress. One university ultimately decides whether learning you did elsewhere counts towards its award, and practice varies. Modularity also isn’t cost-free: even short units need admissions checks, timetables, advice and assessment, so institutions may scale cautiously or stick to subjects with clear prerequisites. And performance metrics were built for whole degrees, not “step-on, step-off” study, so departments worry about being penalised when learners pause between modules.

    At the most selective end of the system, mid-course entry and external credit are rare. That’s not special pleading; it reflects how recognition works in England: one university confers the degree and decides what counts. The LLE can pay for learning in many places; it doesn’t compel acceptance.

    Colleges and universities can make progress quickly by acting as one system: align first-year expectations so college students aren’t starting cold; recognise T Levels and Higher Technical Qualifications clearly in admissions; share transition data so support follows the learner; co-deliver study-skills content; and publish simple maps showing which level-4 modules count towards which degrees. Otherwise, too many learners hit the boundary and bounce off it (see this practical bridging agenda from Imran Mir at Apex College Leicester).

    In countries where adult study is normal, systems don’t just fix tuition; they also help with the time cost of learning and make credit transfer routine. The pattern is tuition + time + transfer solved together. England’s LLE chiefly tackles tuition; the other two levers still need work.

    The wider growth story is that systems that reach more adult learners tend to do three things at scale: institution-wide digital delivery (not a side-project), employer-linked curricula and experiential learning, and a clear identity around inclusion and student success. The LLE can be the catalyst, but only if leaders build for lifelong learners across the whole institution rather than at the edges, with enterprise-level innovation in online and hybrid learning, partnerships, brand reach, and transfer-friendly design.

    Interdisciplinarity without contortions

    A live tension is the HECoS rule: a module’s main subject tag is expected to match its parent course. That keeps data tidy and protects students, but it can blunt genuinely cross-field learning just as employers ask for blended skill-sets (AI plus a domain like health or media; green and digital transitions).

    Createch – where creative practice, design, computing, data/AI and business models meet – is a good test case. There are two practical tracks. One is provider-led, inside today’s rules, and would involve setting up interdisciplinary parent programmes (for example, Createch and Digital Production) so the main tag stays compliant, and using secondary or proportional tags to reflect the mix. Institutions would co-deliver paired modules across departments with published progression maps and build employer-validated outcomes so transfer is easier to justify.

    A policy-led approach would require government and regulators to clarify guidance on proportional coding and run time-limited pilots allowing defined exceptions to the strict primary-code match where labour-market need is clear (Createch is a strong candidate). After consultation, there could be small, targeted tweaks so specified cross-disciplinary modules can be funded without awkward rebadging.

    Options for system development

    Portability needs to be easier to plan. A credit-transfer guarantee in a few defined subject areas, backed by shared learning-outcome descriptors and a standard digital transcript, would give learners and providers confidence. Publishing typical acceptance rules – and deciding transfer requests within indicative timeframes – would also help.

    Fund time as well as tuition, selectively. A wage-linked maintenance pilot for priority level 4–6 modules, with pro-rata childcare and disability support, could unlock participation for adults who can’t take a pay hit to study.

    Commission where demand is obvious. A small national fund could buy short university courses in shortage areas with colleges and local employers.

    Build planned pathways. Federated degrees and regional FE–HE compacts can publish simple maps from level 3/4 to degree entry (including any bridging) and show how 30-credit modules stack inside an approved parent course.

    Tune the measures. Outcome metrics that recognise pauses between modules would reduce the risk of doing the right thing for modular learners.

    Balance selective and inclusive levers. Any growth money might come with contextual admissions and targeted pathways at high-tariff universities, alongside serious student success investment where most low-income learners actually study and, crucially, institution-wide innovation rather than pilots at the margins.

    The LLE widens options but on its own it won’t rebalance outcomes. If England wants fair access and attainment, the system can combine portable recognition, realistic support for time out of work, and commissioned provision where need is greatest – and pair it with institution-wide innovation that treats adults as core learners, not extras. That’s how Amira and Ben actually get through the door, and how the sector grows again.

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  • What is student financial support for in 2025?

    What is student financial support for in 2025?

    UCAS has published its end of cycle data for 2025.

    Alongside the headline figures on acceptances – a record 577,725, up 2.3 per cent on last year – there’s new data on where students intend to live while studying.

    For the first time, UCAS has released figures on intentions to live at home, and they make for fascinating reading.

    Some 89,510 UK 18-year-olds who secured a place this autumn indicated they intended to live at home – up 7 per cent on 83,705 last year.

    That means 31 per cent of UK 18-year-old accepted applicants planned to stay in the family home, a record high and a slight increase on 30 per cent in 2024. A decade ago, it was 22 per cent.

    The figures differ sharply by nation and – crucially – by deprivation. Scottish 18-year-olds are most likely to live at home (46 per cent of accepted Scottish applicants), while Welsh 18-year-olds are least likely (21 per cent).

    But the deprivation gradient is where the real story lies – 52 per cent of UK 18-year-olds in IMD Quintile 1 indicated they planned to live at home, compared to just 12 per cent in Quintile 5.

    In England, that means the most disadvantaged young people are 3.5 times more likely to stay at home than their most advantaged peers.

    The new scholarships tool

    Alongside the figures, UCAS has launched a new scholarships tool designed to help students find the financial support available to them – a development that, given the data above, feels pretty timely. As UCAS chief executive Jo Saxton puts it:

    Every young person should have the chance to make choices based on ambition, not affordability – which is why UCAS has launched a new scholarships tool to help students find financial support and keep their options open.

    Saxton is careful to note that staying at home can “absolutely be the right choice for some”, such as those with caring or family responsibilities – but for others “it may close doors and limit access to courses or the wider university experience.”

    The growing numbers, she suggests, may be driven by rising costs of living and broader financial considerations.

    One of the persistent criticisms of institutional financial support has been its opacity – the postcode lottery of provision that makes it extraordinarily difficult for prospective students (and their advisers) to understand what’s available where.

    Research by Brightside found widespread confusion among young people from low socioeconomic backgrounds about the differences between bursaries, scholarships, and fee waivers, with one commenting that it was almost like universities were “hiding this information away.”

    A centralised tool that aggregates the information is a substantial step forward.

    What are bursaries supposed to do?

    The UCAS development invites another question – what, precisely, is all this student financial support supposed to achieve? As providers face their own financial squeeze – and as I noted last year, some are cutting planned support with OfS approval – it’s worth examining the policy rationale that’s supposed to underpin institutional bursaries and other forms of financial support in 2025.

    In England, the Office for Students’ topic briefing on financial support sets out the regulatory expectation. Providers must, it says, take an evidence-led approach to developing financial support measures, providing a clear rationale for how financial support investment will help to reduce the gaps in access, success and progression.

    Where providers have committed significant resources to financial support, OfS requires “strong evidence” in access and participation plans of how this will “help to improve outcomes for underrepresented students.”

    The difficulty – and OfS acknowledges this – is that the evidence base has been historically thin. The topic briefing noted that previous sector-level analysis has found little evidence that financial support affects student outcomes.

    OFFA research from 2010 found no evidence that bursaries influenced students’ choice of university – subsequent research in 2014 found no evidence that institutional bursary schemes had an observable effect on continuation rates.

    A review by Nursaw Associates concluded that “financial support is not the most important factor in students’ decisions to apply to higher education” and that students receiving financial support have “comparable non-continuation rates with those who receive no financial support.”

    There is, however, a footnote. That same review found that “a sizeable minority of students feel financial support does impact on their behaviour” – suggesting that bursaries may affect attitudes and relationships with institutions, even if the impact on hard outcomes proves harder to detect at sector level.

    What TASO says

    The Centre for Transforming Access and Student Outcomes (TASO) ought to know, and it distinguishes between pre-entry and post-entry financial support. For support offered after students enter HE, TASO’s assessment is that there’s a high-quality body of evidence that finds financial support can have a positive impact on retention/completion – but with a significant caveat:

    …most of the existing research comes from the USA and more evidence is needed on the impact of financial support in the current UK context.

    The key UK study TASO cites is Murphy and Wyness (2016), which found that increasing financial aid by £1,000 increased the likelihood of obtaining at least an upper second-class degree by 3.7 percentage points.

    That’s meaningful – though hardly transformative.

    TASO’s overall verdict is that there is a reasonable evidence base to support the use of needs-based grants to promote retention/completion, but less strong evidence that this approach can improve attainment/degree classification.

    Crucially, TASO is clear about what remains unknown:

    Currently we do not have enough evidence to make claims about which forms of financial support (bursaries/grants/fee-waivers/scholarships) are most effective.

    It also notes that the sector is lacking causal studies about the impact of financial support offered by HE providers in the UK – and that even UK studies from the 2000s might not be relevant anymore, given that the system of student finance has considerably evolved.

    What providers say they’re doing

    The (fairly) newly approved Access and Participation Plans give us a window into how providers are framing their financial support – and the patterns that emerge are revealing.

    Cost pressures

    Across virtually every plan, financial support is positioned as addressing what OfS terms “EORR Risk 10” – cost pressures that can jeopardise a student’s ability to engage with and complete higher education. The language is consistent to the point of being formulaic – bursaries exist to “alleviate financial concerns,” “reduce the necessity for students to undertake excessive paid work,” and allow students to “focus on their studies.”

    Bournemouth University’s framing is typical – its maintenance bursary aims to:

    …reduce financial anxiety and enable students to focus on their studies.

    This is, in policy terms, a success-stage intervention. The dominant theory of change is that financial support improves continuation and completion by reducing the competing demands on students’ time and attention – not that it drives access in the first place.

    Only a handful of plans make explicit claims about bursaries influencing choice of institution, reflecting the weak evidence base on that question.

    The variation in provision

    The amounts on offer vary enormously. At the top end, Imperial College commits over £12.6 million annually to financial support, with its Imperial Bursary providing up to £5,000 per year for students from households with incomes under £70,000.

    King’s College London forecasts over £10.1 million annually through its King’s Education Grant scheme, offering £2,000 per year for students with household incomes up to £25,000. The Courtauld Institute – small but London-based – offers up to £3,000 annually for students with household incomes of £45,000 or less, plus a competitive scholarship worth £10,000 over three years.

    At the other end, provision is far more modest. Anglia Ruskin’s core bursary offers £300 for households up to £25,000, and £200 for those between £25,001 and £42,875. Leeds Arts University’s Creative Practice Support Bursary provides £400 in Level 4, £500 in Level 5, and £700 in Level 6.

    Aston offers just £500 in first year only for households under £42,875. Birmingham Newman’s Support Fund averages around £429 per grant application.

    The household income thresholds at which support kicks in also vary wildly – £25,000 at many providers, £30,000 at Bradford, £42,875 at others, £45,000 at the Courtauld, £63,000 at Sheffield Hallam, and £70,000 at Imperial. A student from a household earning £50,000 would be entitled to substantial support at some institutions and nothing whatsoever at others.

    Care leavers and estranged students

    If there’s one area of genuine consensus across the plans, it’s the treatment of care-experienced and estranged students. These groups consistently receive the most generous and comprehensive support – reflecting both their acute financial vulnerability and the sustained lobbying by organisations like Stand Alone and Become.

    City University of London offers £3,500 annually through its City Cares Bursary, plus up to £2,500 in hardship funding and a £750 graduation package. Bournemouth provides £3,000 per year plus guaranteed year-round accommodation. Coventry covers 52 weeks of accommodation costs – valued at approximately £8,320 per care leaver annually – recognising that these students have nowhere to go during vacations.

    King’s adds an extra £1,000 annual award on top of its standard bursary. Liverpool Hope offers a 50 per cent accommodation discount plus a catering package. Northumbria’s new Unite Foundation partnership offers free 52-week accommodation for up to six eligible students.

    The rationale is that these students face not just financial disadvantage but the absence of family safety nets. The consistency of provision here – and its relative generosity compared to income-based bursaries – suggests the sector has internalised the argument that care leavers require qualitatively different support.

    Hardship funds

    Beyond core bursaries, hardship funds have expanded substantially across the sector. Northumbria commits £3 million annually – a figure that reflects both genuine need and, perhaps, an acknowledgment that predictable bursary amounts cannot address unpredictable financial crises.

    Kingston forecasts over £2.2 million in total financial support, with its Student Support Fund providing up to £3,000 for students with dependents. Birmingham City maintains a Financial Assistance Fund of £1.375 million annually. Canterbury Christ Church’s Access to Learning Fund can award up to £3,750 for students in extreme hardship.

    The growth of hardship provision raises an interesting question – is this evidence that core bursaries are insufficient, or that student financial precarity has become so acute that even “adequate” maintenance plus bursary doesn’t prevent crisis? Several plans note rising applications to hardship funds as a driver of expanded provision – Falmouth explicitly states it has “substantially increased funding for the Hardship Fund to meet demand.”

    Expansion of in-kind support

    A notable trend is the expansion of non-cash support – laptops, textbooks, food, accommodation subsidies – that address specific barriers rather than providing general maintenance. Birmingham City’s “BCU Advantage” scheme provides students from the most disadvantaged backgrounds with a “laptop for life.” Anglia Ruskin offers one free core electronic textbook per module to all Level 4 students.

    Several providers now run community pantries, food banks, or subsidised meal schemes – Birmingham Newman offers discounted food after 2pm, Canterbury Christ Church has a “Helping Hand menu,” Leeds Trinity provides a “£2 hot meal deal.”

    This shift reflects a recognition that cash bursaries, however welcome, may not address specific resource barriers. A student who can’t afford a laptop faces a qualitatively different problem from one who needs help with general living costs – and a textbook scheme that reaches all students may be more equitable than a bursary that requires application and means-testing. The Open University’s Study-Related Costs Fund, providing grants up to £250 for IT equipment, explicitly addresses the “digital exclusion” risk that’s particularly acute for distance learners.

    Progression-related support

    There’s also growing emphasis on progression-related financial support – interview travel costs, placement expenses, work experience funds, internship bursaries – reflecting recognition that financial barriers don’t end at graduation. Aston offers a £1,250 placement bursary for students from low-income households or those undertaking unpaid placements. City University’s Micro-placement Fund provides up to £500 for participation in micro-placements. Arts University Bournemouth offers up to £300 for costs associated with accessing graduate employment opportunities.

    The rationale is explicitly tied to closing progression gaps. As Bournemouth’s plan notes, “internal data shows that placements are strongly associated with improved degree attainment and progression into high-skilled employment” – but low-income students face financial barriers to participation. Liverpool John Moores is developing new “ring-fenced paid internship programmes” specifically for Black students and care-experienced students, “targeting sectors where progression gaps are largest.”

    Scholarships Plus

    A handful of providers are explicitly integrating financial support with non-financial interventions – what York St John calls “Scholarships Plus.” The idea is that cash alone is insufficient – bursaries should be accompanied by activities designed to enhance confidence, belonging, and career readiness.

    Sheffield Hallam’s Student Success Scholarship is “highly targeted at students with household incomes under £63,000 who belong to defined ‘priority groups’” – but the purpose is explicitly to increase “the student’s capacity to engage fully with their studies,” not just to provide income replacement.

    It’s a more sophisticated theory of change than simple cash transfer – but it also raises questions about conditionality and whether support should require participation in additional activities. The evidence base for “scholarships plus” approaches is, if anything, even thinner than for straightforward bursaries.

    Front-loading versus smoothing

    The plans also show up divergent approaches to how support is structured across the student lifecycle. Some providers front-load support, offering higher amounts in first year when transition challenges are greatest. Aston’s £500 bursary is first-year only; Kingston’s £2,000 bursary is first-year only. The rationale is that this is when financial barriers to continuation are most acute.

    Others have moved in the opposite direction. One provider I looked at last year shifted from higher initial support with reduced amounts in subsequent years to a flat £1,000 across all years – a “smoothing” approach. Leeds Arts University actually back-loads its support: £400 in Level 4, £500 in Level 5, £700 in Level 6 – reflecting the higher material costs of final-year creative projects. Norwich University of the Arts does something similar: up to £500 in Year 0/1, £300 in Year 2, £200 in Year 3.

    The evidence on optimal timing is essentially non-existent. Does front-loading improve continuation? Does back-loading support completion? Does smoothing reduce financial anxiety across the whole course? The plans assert various rationales, but few cite robust evidence for their chosen approach.

    Evaluation, evaluation, and inflation

    OfS requires providers to evaluate their financial support using “robust methods” – and several plans reference the OfS Financial Support Evaluation Toolkit, quasi-experimental designs, or commitments to ongoing evaluation. Birmingham mentions it “will continue periodically” to evaluate its financial support offer “based upon the OfS financial support toolkit.” East Anglia commits to evaluating financial support “using a quasi-experimental design.”

    But the reality is that there’s little evidence of systematic evaluation across the sector – and almost no evidence that planned reductions in financial support have been evaluated for negative impacts. Providers cutting bursaries don’t appear to be required to demonstrate that this won’t harm continuation or completion. The OfS toolkit exists, but its use appears patchy at best.

    Also notable is what’s absent from the plans. Inflation – the factor that has most dramatically affected student living costs over the plan period – is rarely mentioned except in relation to the maximum tuition fee that providers hope to charge.

    Students facing a cost-of-living crisis that has seen food prices rise by over 25 per cent since 2021 are, apparently, not worthy of quantified analysis. Bursary amounts are stated in nominal terms with no commitment to uprating – household income thresholds are fixed with no acknowledgment that £25,000 in 2028 will be worth substantially less than £25,000 today.

    Kingston’s new “Back on Track grant” – up to £500 for students experiencing “short-term financial difficulty due to cost-of-living increases” – is one of the few explicit acknowledgments that inflation has changed the landscape. But this is framed as crisis intervention, not as a reason to revisit core bursary amounts.

    Coherence

    Overall we see a sector that has internalised a consistent rationale for financial support – addressing cost pressures to improve continuation and completion – while implementing it through inconsistent mechanisms. A student from a household earning £25,000 might receive £5,000 at Imperial, £2,000 at King’s, £1,000 at Kingston (first year only), £500 at Aston (first year only), or £300 at Anglia Ruskin. The same student with care experience might receive anywhere from £1,000 to £8,000+ depending on institution, location, and whether accommodation is included.

    This is, of course, partly a function of institutional resources and student demographics – providers with higher proportions of disadvantaged students must spread resources more thinly. Murphy and Wyness (2016) found precisely this – a decentralised bursary system creates inequalities, with disadvantaged students at better-resourced institutions receiving substantially more. As they noted:

    …universities with a higher proportion of disadvantaged students have to spread their resources amongst more students, limiting the amount that each student can get.

    But there’s a deeper coherence problem. The regulatory framework asks providers to demonstrate how financial support will “improve outcomes for underrepresented students” – yet the evidence that institutional bursaries achieve this at scale remains weak.

    Providers are, in effect, being asked to evaluate something that the sector-level evidence suggests may not work in the way the policy assumes. And when providers conclude that their bursary scheme isn’t delivering – or that resources would be better deployed elsewhere – OfS appears willing to approve reductions without requiring evidence that this won’t cause harm.

    Meanwhile, the broader context is getting worse. Maintenance loan increases have failed to match inflation; the parental contribution threshold has been frozen at £25,000 since 2007; and today’s UCAS data shows disadvantaged students increasingly constrained in their choices. The total planned financial support across the sample I examined last year was set to fall from £20 million in 2020-21 to £17 million by 2028-29 – real-terms cuts, approved by OfS, at precisely the moment students need more support.

    The UCAS tool matters

    This is why the UCAS scholarships tool feels significant – not because it solves the underlying problem, but because it at least addresses one of the compounding factors. If bursaries are to have any effect on access (rather than just continuation), prospective students need to know what’s available before they make choices.

    The current system, where information is scattered across hundreds of institutional websites with different eligibility criteria, different application processes, and different timescales, serves no one well.

    A centralised tool won’t fix the postcode lottery of provision. It won’t address the fact that some providers are cutting support while others expand it, and it won’t resolve the fundamental question of whether institutional bursaries are the most effective use of access and participation spend. But it might – might – help more students discover support they’re entitled to, and make slightly more informed choices as a result.

    As Saxton notes:

    …we need to remain alert to these challenges and more research is needed to fully understand the impact on student choice and progression.

    That research gap – what financial support actually achieves, for whom, and under what conditions – remains the elephant in the room. Until it’s addressed, we’re left with a system where providers invest hundreds of millions of pounds annually in financial support, regulators require evidence of impact, but we still don’t really know whether any of it works.

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  • The future of financial hardship support needs to be flexible

    The future of financial hardship support needs to be flexible

    The government’s recent white paper on Post-16 Education and Skills places flexibility and choice at the centre of the future student experience.

    When it comes to students, the government wants universities and colleges to adapt to a much wider range of demographics and to further embrace diversity – while continuing to break down the barriers to opportunity for students from all backgrounds.

    One of the ways to strengthen opportunity is through the additional forms of financial support (via bursaries, scholarships and special-case funds) that higher education institutions provide for those students most at risk of dropping out, or those simply denied opportunity in the first place.

    When it comes to this funding, the sector needs to work much harder in supporting a more varied set of future students, whilst making better use of data to design support packages, and adapting to the real-time user requirements for this type of funding.

    Beyond the post-school model

    The majority model of financial support is still designed primarily for a post-school entrant market (in line with access and participation plans) but we now need to evolve this for a much broader range of working students, part-time students, later life students and so on – based on the white paper’s steer for different student demographics and for more support for students from lower income backgrounds. This will require more agility. It will also require a closer and more strategic, data driven approach to the timing, delivery and use of such student funding.

    Universities will increasingly be expected to meet the needs of a more diverse and complex learner population, one that is typically older, more financially stretched, and balancing work, family, caring responsibilities, and study. While the student body is evolving at pace, and there are encouraging signs of greater flexibility and adaptability across the sector, as highlighted in The Shape of Student Financial Support in 2025, there is also clear recognition that more progress is needed.

    In our work with universities (designed to strengthen the effective delivery and impact of student financial support) we refer to this sea-change in funding as enabling both more optionality (for the funders) and greater agency (for the beneficiaries). Too much of the sector’s current model still assumes the profile and rhythms of the traditional 18-year-old school leaver. Policy momentum is pushing us firmly beyond this, and institutions will need to rethink not just how much financial support they provide, but how, when and in what form it is provided, and crucially, who it is designed for.

    A new student majority

    Commuter students, part-time learners, those studying while working full-time, and individuals returning to education later in life are no longer outliers. They are becoming a significant and growing segment of the student population, and the white paper’s direction of travel signals that this growth will continue.

    These learners typically have different cost profiles, different pressures, and different expectations around support. Rent and food costs matter, of course, but so do childcare, caring responsibilities, travel to placements and campus, and the financial instability that often comes with shift-based or zero-hours work. Their support needs do not fall neatly around term dates.

    A modern student support system must reflect that reality.

    Beyond the “once-a-year” mindset

    One of the strongest messages emerging from our work with universities is that timing of support is as critical as the pound value that support. Students increasingly need support that works with the grain of real life, not against it. That means agility: funds that can be released quickly during a crisis; support that can be drawn down in a way that helps with budgeting; and options that reflect different lifestyles, responsibilities, and individuals preferences around how they manage their finances.

    For mature learners, the notion of a predictable “start of term” pressure point is often irrelevant. Housing, employment and family commitments create fluctuating financial pinch-points throughout the year. A forward-looking and agile hardship and support model must therefore allow universities to intervene dynamically, reacting to student need rather than institutional calendar.

    Across the more than 40 institutions we partner with, we see a growing shift toward more targeted, purpose-led and flexible support. Although institutions are facing significant financial constraints, they are adapting, often rapidly, to ensure funding reaches the right students in a way that genuinely makes a difference.

    We are seeing:

    • A move toward more tailored interventions, with universities reshaping bursaries and hardship schemes around specific learner profiles, including mature and commuter students.
    • Increased use of real-time payment mechanisms, enabling rapid support when a financial shock threatens continuation.
    • Greater use of data to understand how different types of students use support, and what interventions are most likely to prevent financial distress, disengagement or withdrawal.
    • Growing recognition that support must be designed around lived experience, responsive to trends and feedback, not just institutional tradition.

    This shift is encouraging, but the system as a whole is not yet optimised for the demographic change that the White Paper anticipates.

    Where policy meets practice: recommendations for a modernised support model

    To prepare for a more diverse learner population, the sector will need to reimagine its support architecture. From our work with universities and our ongoing analysis of funding patterns, several recommendations emerge:

    We should build support models around life-stage, not simply level of study. Mature and non-traditional learners experience costs and vulnerabilities that differ from the archetypal school-leaver. Support schemes should explicitly recognise this, particularly around childcare, travel, digital access, and household stability.

    There is a need to shift from fixed-cycle payments to flexible, real-time support. Financial crises rarely occur conveniently during scheduled disbursement windows. Universities need mechanisms that allow for rapid, secure, and dignified disbursement of funds whenever needed.

    It is time to explore hybrid support models that blend cash, credit and vouchers. Different pressures require different tools. Cash support is essential in alleviating hardship. Credit and voucher mechanisms can help direct funds toward participation, learning, and targeting food poverty. Mature learners often benefit from a mixture of both.

    We must make data central to decision-making. With financial pressure mounting across the sector, institutions must allocate limited resources with precision. Data on spending patterns, draw-down behaviour and student feedback can inform more effective and equitable holistic support strategies.

    We should co-design support with the students who rely on it. There is no substitute for listening to those living the experience. Mature and non-traditional students frequently report that support systems “aren’t designed for people like me”. Bringing their voices into design and evaluation will be vital.

    A financial support system fit for the future

    The white paper’s direction is clear: widening participation will no longer be defined simply by access for school leavers from underrepresented groups. It will increasingly require a system capable of supporting learners from every life stage, people retraining, upskilling, switching careers, balancing caring responsibilities, or returning to education for the first time in decades.

    This transition will require institutions to be flexible, evidence-led, and prepared to evolve their traditional models of support. Our latest annual report provides one lens on how this evolution is taking place, and where further change is needed. But the wider policy moment demands more than reflection: it demands intentional redesign.

    If universities are to deliver opportunity for all, as the white paper sets out, they will need financial support systems that reflect the real, diverse, year-round lives of today’s and tomorrow’s students. Flexibility is no longer a helpful addition; it is the foundation on which effective, equitable support must be built.

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  • For students, the costs of failure are far too high

    For students, the costs of failure are far too high

    Back in May, I argued that the UK’s “pace miracle” – the system that produces the youngest, fastest-completing graduates in Europe – is damaging students’ learning and health.

    Our system’s efficiency, I suggested, comes at the cost of pressure, exhaustion, and a creeping normalisation of distress.

    But what happens when students fall behind in that miracle? What happens when someone breaks the rhythm that the entire funding and regulatory framework assumes to be normal?

    For our work with SUs, Mack Marshall and I have been looking in detail at the rules and funding that surround “retrieval”.

    From what we can see, UK higher education doesn’t just expect rapid completion – it punishes deviation from it.

    When students stumble, the architecture designed to retrieve them from failure taxes disadvantage and rewards privilege.

    The illusion of generosity

    Pretty much every university we’ve looked at has policies designed to look fair. There is almost always a promise of one reassessment opportunity, and increasingly a public line about not charging resit fees. On paper, that sounds humane – but in practice, the design is economically brutal.

    When a student fails a module and resits within the same academic year, the direct cost may be zero. But there’s no maintenance support for any extra study they need to do. And if that student is placed on reassessment-only status for the following year – allowed to resit assessments without attending teaching – they become ineligible for maintenance funding for much, much longer.

    That means no support for rent, bills, or food for months. The student who can rely on family help revises in comfort. The student who can’t works full-time through summer and fails again, or drops out entirely.

    The sector calls the resit “free” and congratulates itself on removing barriers. But the barrier was never the invoice – it was the maintenance cliff.

    This is not a marginal anomaly – it’s the structural product of the same system that glorifies pace. It’s a logic that insists most degrees must be achieved within three years – one that also dictates that recovery from failure must happen outside the funded frame.

    To understand what happens to students who fail, students need to navigate a maze of regulations, finance policies, visa rules, and handbooks – each written in its own dialect of compliance.

    Students from professional families likely know where to look and what questions to ask. They have the vocabulary, the contacts, the confidence, while first-generation students rarely do. They may well discover “compensation” rules only after exam boards meet, and learn about extenuating circumstances after the deadline passes.

    The result is an information economy that mirrors the class system. The retrieval framework may be universal, but its navigation costs are socially distributed.

    The poverty penalty v pedagogy

    When students pass a module on reassessment, their mark is often capped at the pass threshold – 40 per cent for undergraduates, maybe 50 per cent for postgraduates. The principle sounds rigorous, but the reality is punitive.

    A student who failed once because they were caring for a parent, working nights, or suffering mental ill-health can never escape the academic scar tissue unless it’s a complex and approved mit-circs application. The capping rule converts a temporary difficulty into a permanent credential penalty.

    It is the same ideology that underpins the pace miracle – a meritocracy of difficulty that romanticises struggle and treats rest as weakness. Only it is encoded in assessment policy rather than culture.

    For international students, the same logic takes on a bureaucratic form. Those who fail a single module often face a choice between reassessment-only status – which ends their visa – or repeating with attendance purely to remain sponsored.

    Repeating with attendance can cost thousands of pounds in tuition and visa fees. Many have no realistic option but to pay. The system enforces what looks like a market choice – but is in practice compulsion.

    The Lifelong Learning Entitlement – fix or mirage

    In England at least, the forthcoming Lifelong Learning Entitlement (LLE) ought to usher in flexibility. Funding will finally be linked to credits rather than years. Students will be able to study, pause, and return across their lifetimes. In theory, that should dismantle the rigid three-year cage.

    But in practice, everything will depend on how universities classify students, and how they’re allowed to resit. If reassessment-only learners are still coded as “not in attendance”, they still fall outside maintenance entitlement. The policy will have modernised the vocabulary of exclusion without addressing its cause.

    And even when students do qualify, the LLE’s promise of proportional maintenance means something subtle but serious – flexibility is offered as additional debt, not as forgiveness. Students who fall behind because of illness or bereavement will borrow more, not owe less.

    Unless maintenance is reconceived as a right to recovery rather than a privilege of progression, the LLE risks becoming a faster, more efficient version of the same trap.

    Across Europe, completion frameworks are slower and more forgiving. Some countries permit students a decade to complete a bachelor’s degree without financial penalty. Temporary setbacks don’t trigger existential crises – because variations in time are built into the design.

    As I referenced here, the HEDOCE project found that students in systems with longer completion horizons are less likely to drop out entirely and more likely to recover from setbacks. Those systems treat time as a pedagogical resource, not an efficiency problem.

    In contrast, our compressed model leaves no room for error. Once you stumble, the treadmill doesn’t slow down – it throws you off.

    Beyond efficiency

    Our systems for “retrieval” are not an isolated bureaucracy. They’re the endpoint of a philosophy – the same one I explored in the “pace miracle” piece. Both the speed and the punishment are symptoms of a culture that prizes output over understanding, and throughput over humanity.

    When the system is calibrated around efficiency, every deviation becomes failure, and every failure becomes costly. The student who needs time is framed as wasteful – and the institution that supports them risks financial loss.

    I suspect that is why academic pressure now appears so often in mental health reviews. The structure of funding itself generates the anxiety we later medicalise – what looks like individual struggle is really systemic design.

    If we genuinely wanted a system that supports learning rather than policing pace, we would start by aligning time, funding, and compassion.

    Maintenance support would continue for students on reassessment-only status. Resit marks would reflect achievement, not past misfortune. Compensation and extenuating circumstances policies would be clear, accessible, and generous.

    And more profoundly, universities would stop treating recovery as inefficiency. Every student who fails and returns would be evidence of persistence, not profligacy.

    In England, the LLE could be a turning point – a framework that finally recognises learning as cyclical and non-linear. Or it could simply re-brand the same cruelty in the language of flexibility.

    When I wrote about the UK’s “pace miracle”, I argued that we have built a higher education system that prizes speed and punishes delay – a model that achieves impressive completion rates at the cost of wellbeing, mastery, and fairness.

    Our retrieval systems are the mirror image of that miracle. One governs what happens when students move too slowly during the race – the other governs what happens when they fall altogether. Both reveal the same problem – UK HE mistakes motion for progress, and speed for success.

    A humane higher education system would not just help students recover from failure – it would stop treating recovery as failure in the first place.

    Until then, our miracle of efficiency will continue to hide a quiet cruelty. The students least able to afford failure will remain those the system punishes most heavily – not because they lacked talent or effort, but because we built a structure that makes time itself the privilege they can rarely get a loan for.

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  • Grants return, the levy stays

    Grants return, the levy stays

    Speaking at the Labour Party conference, Secretary of State for Education Bridget Phillipson announced the (limited) return of student maintenance grants by the end of this Parliament:

    I am announcing that this Labour government will introduce new targeted maintenance grants for students who need them most. Their time at college or university should be spent learning or training, not working every hour god sends.

    As further details emerged, it became clear that these would be specifically targeted to students from low-income households who were studying courses within the same list of “government priority” subject areas mentioned in plans for the lifelong learning entitlement. As a reminder these are:

    • computing
    • engineering
    • architecture, building & planning (excluding landscape gardening)
    • physics & astronomy
    • mathematical sciences
    • nursing & midwifery
    • allied health
    • chemistry
    • economics
    • health & social care

    These additional grants will be funded with income from the proposed levy on international student fees, of which little is known outside of the fact that the immigration white paper’s annex contained modelling of its effects were it to be set at six per cent of international student fee income. The international student levy will apply to England only.

    There will be further details on the way the new grants will work, and on the detail of the levy, in the Autumn Statement on 26 November. This is what we know so far – everything else is based on speculation.

    Eligibility

    A whole range of questions surround the announcement.

    How disadvantaged will a student have to be – and will it be based on family income in the same way that the current system is? Imagine if entitlement was set at below the current threshold for the maximum loan – disadvantaged enough to get the full loan, not enough for a grant.

    If it’s set anywhere near the current threshold – £25,000 residual family income since 2007 – there’s a lot of “disadvantage” going on above that figure. If it’s set above that figure, that will beg the question – why assume a parental contribution in the main loan part of the scheme?

    Will it be on top of, or simply displace some of the existing loan? If it’s the latter, that won’t help with day to day costs, and as the Augar review noted – those from the most disadvantaged backgrounds are least likely to pay back in full anyway, which would make the “grant” more of a debt-relief scam.

    The distribution in the apparent hypothecation will be fascinating. It does mean that international students studying at English universities will be funding grants for English domiciled students wherever they are studying. Will devolved nations now follow suit?

    If international student recruitment falls, will that mean that the amount of money available for disadvantaged student grants falls too or is the Treasury willing to agree a fixed amount for the grants that doesn’t change?

    Restricting grants to those on the lowest incomes does mean that the government intends to relieve student poverty for some but not others, based on course choice. Will that shift behaviour – on the part of students and universities – in problematic ways?

    With the LLE on the way, will grants be chunked up and down by credit? See Jim’s piece from the weekend on the problematic incentives that this would create.

    The hypothecation also raises real moral questions about international student hardship being exacerbated to fund home student hardship relief – if, as many will do, universities put fees up to cover the cost of the levy. The possibility of real resentment from international students, who already know they’re propping up the costs of lower and subsidised fees, is significant.

    For LLE modular tuition fee funding, under OfS quality proposals Bronze/Requires improvement universities will have to apply for their students to access it – they will need to demonstrate that there is a rationale for them doing IS-8 courses. Will that apply for these grants too?

    Phillipson’s speech also referenced work– students’ time at college or university should be “spent learning or training, not working every hour god sends”. By coincidence, Jim worked up some numbers on how much “work” the current loan scheme funds earlier. Whether we’ll get numbers from Phillipson on what she thinks “every hour god sends” means in practice, and how many hours she thinks students should be learning or training for, remains to be seen.

    We might also assume that the grant won’t be increased for those in London, and reduced for studying at home in the way that the maintenance loan is now. And if this is all we’re going to get in the way of student finance reform, all of the other myriad problems with the system may not get touched either.

    The levy

    There’s a certain redistributive logic in using tuition fee income from very prestigious universities to support learners at FE colleges or local providers, though it is unlikely that university senior managers will see it in quite those terms.

    A six per cent levy on international fee income in England for the 2023–24 financial year would have yielded around £620m, with half of that coming from the 20 English providers in the Russell Group. Of course, this doesn’t mean that half of all international students are at the Russell Group – it means that they are able to charge higher tuition fees to the international students they do recruit.

    [Full screen]

    Of course, the levy applies to all providers – and, as we saw back when the idea was first floated there are some outside of the Russell Group that see significant parts of their income come from international fees, and would see their overall financial sustainability adversely affected by the levy. In the main these tend to be smaller specialist providers, but there are some larger modern universities too. Some universities don’t even have undergraduate students, but will still see their fees top-sliced to fund undergraduate-level grants elsewhere.

    [Full screen]

    There has been a concerted lobbying effort by various university groups aimed at getting the government to abandon the levy plan – as it appears that this effort has failed you would expect the conversations to turn to ensuring the levy is not introduced at six per cent as the Home Office previously modelled, or mitigating its impact for some or all providers. Certainly, as Phillipson chose the same speech to remind us she had taken “the decisive steps we needed on university finances” it would feel like it is not her intention to add to the woes of higher education providers that are genuinely struggling.

    DfE has said that the new grants will be “fully funded” by an international student levy. It’s worth noting that this is not the same as saying that all the levy money will go towards the grants.The tie between the grants and the levy is politically rather astute – it will be very difficult for Labour backbenchers to argue against grants for students on low income, even if they are committed to making arguments in the interests of their local university. But legislatively, establishing a ring fence that ensures the levy only pays for these grants will be very difficult – other parts of government will have their eye on this new income, and the Treasury is famously very resistant to ringfencing money that comes in.

    It also opens up the idea of the government specifically taxing higher education with targeted levies. It is notable that there has been no indication that the levy will be charged on private school fees, or fees paid to English language colleges, where these are paid by non-resident students. DfE itself suggests that £980m of international fees go to schools, and a further £850m goes to English language training – why leave a certain percentage of that on the table when it can be used to support disadvantaged young people in skills training?

    What would it achieve?

    In the end, even grants at the maximum level of £3,000 a year that were recommended by the Augar review wouldn’t have made much difference to student poverty, and there’s been a lot of inflation since.

    And a part of the idea of the levy was to reduce (albeit slightly) the number of study visas granted – if you recall, the Home Office report emerged in a month that everyone became concerned about students claiming asylum. If that part of the plan works (if that was ever really the plan, rather than a fortunate coincidence) then surely there would be less money to play with for maintenance – and any future government that attempts to reduce international higher education recruitment would be accused of taking the grants away from working class students on priority courses?

    The real value in the reintroduction of the grant is that it is politically totemic for Labour. But if it encourages more disadvantaged students to go into HE because of a perception of better affordability when they will still struggle, there will be both a financial and political cost in the long term.

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  • Second-generation student borrowers | SRHE Blog

    Second-generation student borrowers | SRHE Blog

    by Ariane de Gayardon

    Since the 1980s, massification, policy shifts, and changing ideas about who benefits from higher education have led to the expansion of national student loan schemes globally. For instance, student loans were introduced in England in 1990 and generalized in 1998. Australia introduced income-contingent student loans in the late 1980s. While federal student loans were introduced in the US in 1958, their number and the amount of individual student loan debt ramped up in the 1990s.

    A lot of academic research has analysed this trend, evaluating the effect of student loans on access, retention, success, the student experience, and even graduate outcomes. Yet, this research is based on the choices and experiences of first-generation student borrowers and might not apply to current and future students.

    First-generation borrowers enter higher education with parents who have either not been to higher education, or who have a tertiary degree that pre-dates the expansion of student loans. The parents of first-generation borrowers therefore did not take up loans to pay for their higher education and had no associated repayment burden in adulthood. Any cost associated with these parents’ studies will likely have been shouldered by their families or through grants.

    Second-generation borrowers are the offspring of first-generation borrowers. Their parents took out student loans to pay for their own higher education. The choices made by second-generation borrowers when it comes to higher education and its funding could significantly differ from first-generation borrowers, because they are impacted by their parents’ own experience with student loans.

    Parents and parental experience indeed play an important role in children’s higher education choices and financial decisions. On the one hand, parents can provide financial or in-kind support for higher education. This is most evident in the design of student funding policies which often integrate parental income and financial contributions. In many countries, eligibility for financial aid is means-tested and based on family income (Williams & Usher, 2022). Examples include the US where an Expected Family Contribution is calculated upon assessment of financial need, or Germany where the financial aid system is based on a legal obligation for parents to contribute to their children’s study costs. Indeed, evidence shows that parents do contribute to students’ income. In Europe, family contributions make up nearly half of students’ income (Hauschildt et al, 2018). But the role of parents also extends to decisions about student loans: parents tend to try and shield their children from student debt, helping them financially when possible or encouraging cost-saving behaviour (West et al, 2015).

    On the other hand, parents transmit financial values to their children, which might play a role in their higher education decisions. Family financial socialization theory states that children learn their financial attitudes and behaviour from their parents, through direct teaching and via family interactions and relationships (Gudmunson & Danes, 2011). Studies indeed show the intergenerational transmission of social norms and economic preferences (Maccoby, 1992), including attitudes towards general debt (Almenberg et al, 2021). Continuity of financial values over generations has been observed in the specific case of higher education. Parents who received parental financial support for their own studies are more likely to contribute toward their children’s studies (Steelman & Powell, 1991). For some students, negative parental experiences with general debt can lead to extreme student debt aversion (Zerquera et al,2016).

    As countries globally rely increasingly on student loans to fund higher education, many more students will become second-generation borrowers. Because their parents had to repay their own student debt, the family’s financial assets may be depleted, potentially leading to reduced levels of parental financial support for higher education. This is likely to be even worse for students whose parents are still repaying their loans. In addition, parental experiences of student debt could influence the advice they give their children with regard to higher education financial decisions. As a result, this new generation of student borrowers will face challenges that their predecessors did not, fuelled by the transmitted experience of student loans from their parents (Figure 1).

    Figure 1 – Parental influence on second-generation borrowers

    As the share of second-generation borrowers in the student body increases, the need to understand the decision-making process of these students when it comes to (financial) higher education choices is essential. Although the challenges faced by borrowers will emerge at different times and with varying intensity across countries — depending in part on loan repayment formats — we have an opportunity now to be ahead of the curve. By researching this new generation of student borrowers and their parents, we can better assess their financial dilemmas and the support they need, providing further evidence to design future-proof equitable student funding policies.

    Ariane de Gayardon is Assistant Professor of Higher Education at the Center for Higher Education Policy Studies (CHEPS) based at the University of Twente in the Netherlands.

    Author: SRHE News Blog

    An international learned society, concerned with supporting research and researchers into Higher Education

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  • Higher education should lift students out of poverty – not trap them within it

    Higher education should lift students out of poverty – not trap them within it

    As a former student who benefited from welfare payments, I’ve long been consumed with the educational struggle of students on free school meals (FSM) —the official marker we have of relative poverty.

    That’s why I found recent newspaper headlines in autumn 2024 celebrating “record numbers” of poorer students entering university so troubling. On the face of it, this sounded like welcome progress. But this “record” in fact reflected a grim reality: rising numbers of pupils qualifying for free school meals in a growing bulge of 18-year-olds in the population.

    The government’s framing of the latest university admissions figures as good news was unwittingly celebrating rising levels of poverty. A pupil is eligible for free school meals (FSM) if their parent or guardian receives benefits or earns an annual gross income of £16,190 or less. As of January 2024, a quarter (24.6 per cent) of school pupils in England were on FSM – up from 18 per cent in 2018. This rapid rise meant that in the 2022–23 university intake, around 57,000 FSM students were enrolled (alongside 300,000 non-FSM students).

    The 2022–23 academic year will be remembered for an ignominious distinction – the university progression rate for FSM students declined for the first time since records began in 2005–06. The gap in degree enrolment between FSM and non-FSM students widened to a record-breaking 20.8 percentage points (29 per cent versus 49.8 per cent). A meagre 6.1 per cent of FSM pupils secured places at the UK’s most selective universities.

    These statistics are a damning indictment of our collective failure to uphold the principle that university should be open to all, regardless of background.

    Heating and eating

    This year’s Blackbullion Student Money & Wellbeing Survey, now in its fifth year, brings with it more alarming data, shining a harsh light on the lived realities of these university students. The findings are based on 1200 students, surveyed across the UK. This year they are also categorised by measures of disadvantage, including whether students have been eligible for FSM at any point during their school years.

    Almost three-quarters (72.94 per cent) of FSM students said they’d been too hungry to study or concentrate, compared with 47.32 per cent of their non-FSM peers. Nearly seven in ten (67.82 per cent) said they’d been too cold to focus, avoiding heating their homes because they couldn’t afford it (compared with 42.39 per cent of non-FSM students). They are also much more likely to report not being able to study because they are unable to purchase books. Just under half worry that work commitments get in the way of their study. More than eight in ten worry their final degree grade will be harmed by their lack of money.

    These latest findings lay bare the inequities that scar our higher education system—a system that should lift students out of poverty, not trap them within it. As someone who benefitted from a full maintenance grant during my own time at university, these reports of hunger, cold, and financial stress are heartbreaking. I know what a lifeline financial support can be. My termly cheques were a godsend, enabling me to focus on my studies without having to worry about affording the next meal or keeping the heater on in my room. Shorn of basic support, it’s been little surprise to me that recent waves of FSM students have been far less likely to complete their degrees compared with their better-off counterparts.

    Failure to maintain

    It’s time to reintroduce maintenance grants for FSM students in England as part of the new financial arrangements for universities being considered by the Labour government. The removal of grants in 2016 has meant that FSM students are graduating with the largest loan debts. This could understandably be putting many off applying to higher education in the first place.

    At the same time, maintenance loans should increase with inflation, building on the 3.1 per cent rise already announced for 2025–26, going some way to help all students facing immediate hardship while at university. This would be a fair settlement and mirror similar arrangements in Scotland.

    As education officials brace themselves for the toughest of government spending reviews, I don’t underestimate how hard it will be to fund such a reform. But to fail in this task would be a national travesty, betraying not only these students but also the very principle that a university education should be accessible to all, no matter their background or economic circumstances.

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