It is more commonly known than ever: the university-costs system in the UK is pretty broken.
According to The Independent, new research shows due to hugely expensive rent costs and a maintenance loan system that does not reflect the actual needs of the majority of students, most are left to survive off around GBP36 (US$50) per month.
The research found the average renting costs for students stands at GBP566 (US$790) per month. Minus this from the average maintenance loan and students are left with slightly over GBP1 (US$1.40) a day to cover their other living costs.
The Independent reported the Office for National Statistics (ONS) found the average renter in the UK spent under a third of their income on rent in 2017. However, for students, 95 percent of their maintenance loan – which is expected to cover all their living costs – is spent on rent alone, leaving five percent for food, bills, travel, textbooks and other essentials.
In addition to rent, students are also expected to shell out for a healthy house deposit – which they are all too often conned out of at the end of their tenancy – and upfront processing fees.
It is no wonder so many students are deciding to live at home where, according to the National Student Accommodation Survey, they pay parents an average of GBP167 (US$233) a month compared to GBP566 (US$790).
London is undoubtedly the most expensive city for students in the UK, however, rent prices are soaring all over the country. And where London has location-weighted loan allowance, meaning students benefit from a larger loan, the rest of the UK continues to grow more expensive with no amendment made to maintenance loans.
A Save the Student survey found 45 percent of students find financial pressures affecting their mental health, with a third of students feeling their studies suffer as a consequence of their finances.
“[Rent is] a big chunk out of my funding that often puts me back in [my] overdraft as soon as I’m out of it,” third-year student Marianne told The Independent. “It also means that I end up struggling to budget myself from week to week when making sure I’ll have enough to last me [until my] next student loan.”
Second-year student Charlie said she is finding herself needing to work more and more hours to keep up with simple living costs.
“I’m not much of a spender, which really gets to me as I still struggle to pay rent and bills fairly regularly,” she said.
Students expected to live on £1 a day due to crippling rents and lack of financial support https://t.co/55CnzLOAMt
— DCA Business Recovery (@DCABRLTD) February 26, 2018
In order to address the failing system, the government is conducting a year-long review of higher education funding. As MPs reason fees must be cut or at the very least frozen, and interest rates eradicated, financial experts realise this would actually do little good for the majority of graduates.
“Cutting fees or the interest rate is like offering students free beer – and then serving it in a colander: it sounds great in theory, but the reality would be something of a let-down,” Hargreaves Lansdown personal finance analyst Sarah Coles told The Independent.
With fees which get wiped after 30 years, most graduates never pay off the entire sum of their debt. Coles and other experts assert that by changing or eradicating interest rates, all that would actually change would be the amount of debt that is wiped. Students on average starting salaries with average progression would pay off the exact same amount.
83% of students never pay back their #studentloans. The problem isn't the level of these loans, it's that the loan system is inadequate, inefficient and unworkable.#TuitionFees #Students#StudentDebt
Theresa May's university review will not scrap fees – https://t.co/IrZpqqoaWa
— Jupiter Janus (@BraddersOak) February 19, 2018
“The current system is clearly damaging to graduates, who start their adult life with a huge burden of debt. And while most will never repay it, it can still have a detrimental impact,” Coles said.
“These loans are often taken into account when calculating mortgage affordability, so can stand in the way of first-time buyers. They also have a psychological impact – tempting graduates into more debt and acting as a barrier to saving or investing for the future.”
Instead, Coles claimed addressing the gap between maintenance loans and living costs through loans or grants is the most likely method to work.