Prospective university students are “sleepwalking into crisis” as the cost of living soars and government loans fail to keep up with inflation, leaving a £1,000 black hole in their finances.
More than 425,000 people have been accepted onto university courses today, as students across the country received their A-level results. Most will start at university in September, but experts warned many would struggle with rising prices.
Inflation had reduced the real value of maintenance loans. The upper limit for borrowing will be 2.3pc higher than the last academic year, well below the current 10.1pc rate of inflation and the 13pc rate which is expected to be passed later this year.
This means that students most in need of financial support – who are living away from their parents in London – will face a shortfall of almost £1,000.
Jake Butler, of the campaign group Save the Student, said the Government should increase the maintenance loan in line with inflation so that young people were not hit by the full force of the cost of living crisis this winter.
“First year students are never great at budgeting at first, but the rising cost of living will make it even harder for them to adjust,” he said. “Food and energy prices are going to hurt the most.”
The energy price cap is expected to rise from £1,971 to £3,523 in October, just one month after incoming students begin their first term at university.
Students living away from home in London can borrow a maximum of £12,667 to help with living costs in the next academic year.
However, this figure would be £13,632 if it had risen in line with inflation – leaving a gap of £965. For students outside of London living away from home, the shortfall is £740.
Mr Butler also urged the Government to raise the threshold for “low-income households”, which has been frozen at £25,000 since 2008. If this threshold had risen in line with inflation, it would now be around £34,000 and around twice as many students would be eligible for the full loan, according to the Institute for Fiscal Studies, a think tank.
“We are very concerned that students are not getting enough support to navigate the cost of living crisis,” Mr Butler said. “Most will rely on family to help top up their income, but parents are struggling too.”
On average, parents who contribute to university costs expect to pay £9,025 a year, according to research from the Association of Investment Companies, a trade body. But more than three quarters said inflation had made it more difficult to help their children with the cost.
Grandparents have begun to contribute more to university costs: 29pc of parents said that their children’s grandparents will contribute, paying an average of £4,469 a year, compared with just 22pc two years ago.
Students who do not live in university halls are also facing an unforgiving rental market. Last month, landlords raised rents at the fastest rate on record. In London, rental growth hit a high of 15.8pc, the fastest rate ever recorded by the property website Rightmove.
Outside London, asking rents were 11.8pc higher than the same time last year and hit a record of £1,126 per month.
Mr Butler added: "This year's cohort has already suffered a disrupted education because of the pandemic. Now they are being thrown into a cost of living crisis, and changes in the loan repayment system means that it will be more expensive for many of them to go to university next year, so it is killing off gap year plans.
"We are concerned that students are being forgotten in the cost of living crisis and we hope that the Government takes action soon."
A spokesman for the Department for Education 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 need for the current financial year – which is in addition to universities’ own hardship funds.”