Are student maintenance loans going up? University student finance change explained amid cost of living crisis

The government has announced it will increase university student maintenance loans for the next academic year.

But student campaign group Save the Student has said the rise will only widen the gap between the state financial support and the cost of living. It has accused the government of “wilfully ignoring” the plight of young people.

Undergraduates and postgraduates have been hit hard by rising inflation, with a recent survey finding the gap between the maintenance loan and the cost of living grew 29% on average to £439 a month during the 2021/22 academic year. The majority of those who were surveyed reported an increase in mental health problems as a result of their money worries.

It comes after the government intervened twice in 2022 to ensure index-linked tuition fee loan repayments for recent graduates did not soar to unmanageable levels. It has also announced it is going to change how the student loans system works.

So how much has it upped maintenance loans by - and why has the increase been criticised?

What is a student maintenance loan?

The student maintenance loan is money the government lends to undergraduate and postgraduate students to help them with their everyday costs, such as paying for accommodation and everyday necessities. Grants are also offered to students who come from low-income households.

The level of support most students can receive is determined by parental income. If it is below £25,000, the student can claim the maximum amount of student loan. Here is a breakdown of the current maximum loan amounts:

• Students living with parents: £8,171
• Students living away from parents (outside London): £9,706
• Students living away from parents (in London): £12,667

To work out how much student loan you could get, you should visit the student finance calculator on the government website.

If you receive a maintenance loan, you will have to pay it back after your course finishes. Repayments start if you earn over £20,195 a year before tax (if your course started before September 2012) or £27,295 per year before tax for those whose courses started from September 2012 onwards.

How much will university maintenance loan go up?

On Wednesday (11 January), the government said it would increase maintenance loans and grants in England for the 2023/24 academic year - i.e. the university year starting in September 2023.

The amount of money students can claim will go up by 2.8%. It means a student living away from home and outside of London will be able to claim a maximum of £9,978 in 2023/24, while those studying in the capital could get up to £13,022.

The Department for Education (DfE) also announced that it will provide an extra £15 million in hardship funding between January and the end of March 2023 in light of the cost of living crisis. This figure will be in addition to the £261 million it has provided to the Office for Students for the current academic year.

As well as making these cost of living support announcements, the government has said tuition fees in England will remain frozen at £9,250 for the next academic year so that the initial level of debt students will take on will be reduced. Fees last increased in 2017/18, rising by £250.

“University is an investment, setting students up for future success, helping them to climb the ladder of opportunity and gain invaluable skills for the world of work,” said minister for higher education, Robert Halfon.

“We recognise students continue to face financial challenges, which is why we are increasing loans and grants for living and other costs for a further year.

“I’m really pleased to see that so many universities are already stepping up efforts to support their students through a variety of programmes. These schemes have already helped students up and down the country and I urge anyone who is worried about their circumstances to speak to their university.”

What has been the reaction to the maintenance loan changes?

The DfE announcement has been criticised by student and education organisations who have pointed out that the 2.8% increase is well short of the current rate of inflation. As of November, average price increases on the Consumer Prices Index (CPI) stood at 10.7% - a figure close to the record high of 11.1% recorded in November.

Save the Student pointed out that the latest increase follows a rise of just 2.3% for the current academic year. It added that the extra £15 million in hardship funding the government was providing would only equate to £8 per student, given there are currently two million undergraduate students in the UK.

“The 2023/24 maintenance loan rates are a devastating blow to struggling students, who will now see their battle with the cost of living crisis intensify next year,” said Save the Student money expert Tom Allingham.

“With universal credit and state pension rates both rising with inflation, and students unable to benefit from the vast majority of the government’s extra cost of living support, this is yet another example of those in power willfully ignoring the needs of young people in higher education.”

Mr Allingham called on Robert Halfon to go back to the drawing board and hike maintenance funding “above and beyond” the current rate of inflation. He said this would “account for years of insufficient growth”.

The Russell Group - the organisation that represents the UK’s top-24 universities - also criticised the announcement. It said the 2.8% uplift was £1,523 short of RPI inflation for a student studying away from home outside of London.

It accused the government of ‘baking in’ a real terms cut to student maintenance loans, given they will have increased at a below-inflation rate since for the last four academic years by the time this latest change comes in.

"It is disappointing that the DfE has failed to deliver a meaningful increase to maintenance loans or take the opportunity to address some of the flaws in the forecasting process to ensure they keep up with rising costs,” said Dr Tim Bradshaw, CEO of the Russell Group.

“Reversing the real terms cut in the value of the loan since 2020/21 would be a simple fix that would provide much needed immediate support for living costs and would be paid back by the student.“

Dr Bradshaw added that extra government help is “urgently needed” to tackle growing financial pressures on students. He said: “Without it, we are concerned this will have an increasing impact on students’ studies and wider mental health and wellbeing."