The poorest students will be £1.2k worse off next year, as student loan value slumps
The government is doing ‘nothing at all’ to protect students, says the IFS
The poorest students will be £1.2k worse off in the next academic year, according to the Institute for Fiscal Studies (IFS).
This is due to skyrocketing inflation that’s massively devaluing student loans.
The IFS says the government’s attempts to offset the effects of inflation do “nothing at all” to protect students.
Next academic year, the value of maintenance loans will rise by 2.3 per cent.
However, in Autumn, inflation is set to peak at 12 per cent.
This means that in real-terms, students will get far less bang for their buck as their student loan plummets in value.
Last week, the government said it would cap student loan interest rates at 6.3 per cent.
While this offers some relief to graduates, the IFS says the policy “does nothing at all” to protect students at uni right now or in the coming year.
In real terms, the poorest students will be £1.2k worse off in the coming academic year.
Senior research economist at the IFS, Ben Waltmann, told i: “The real-terms value of Government student support is now the lowest in seven years.
“It’s just a very large cut because it means the loans haven’t kept pace with inflation. That means students, unless they make up for it with other work or from larger support for their parents, will be poorer in real terms.
“That’s going to be tough for some students who are going to be on a very tight budget.”
Waltmann thinks that disadvantaged students could be those hit the hardest.
“I think there’s definitely a real concern that not only is it going to be tough for a lot of students,” he said. “t may actually influence their choice of where to go to university or whether to go to university.
“Some might decide to go to a local university in order to live with their parents. But the concern there is that the more disadvantaged students are more likely to do that, and that might mean that they don’t go to the university that will offer them the best career options
That could actually harm social mobility.”
A Department for Education spokesperson said: “We have continued to increase support for living costs on an annual basis for students from the lowest-income households since the start of the pandemic, and they now have access to the largest ever amounts in cash terms.
“We also asked the Office for Students to protect the £256m available to support disadvantaged students and those in the need for the current financial year – which is in addition to universities’ own hardship funds.”
Featured image: Shutterstock / Kevin Hodgson Photography