The government has announced today how maintenance loans for
university students domiciled in England will be adjusted for the
academic year that starts in September. In line with previous
policy, entitlements will rise with forecast RPIX inflation of
2.8%. In contrast to the 2020/21 and the 2021/22 academic year,
this increase is likely to be close to actual inflation if
current forecasts prove correct, so maintenance entitlements next
academic year will be worth roughly the same in real terms as
this academic year.
But the big news here is what has not been announced. The
government is not correcting large cuts to maintenance loan
entitlements due to forecast errors made over the past two years,
and it is also not putting in place a mechanism to correct
forecast errors in the future. This means that students from the
poorest families will in the future be around £1,500 worse off
per year than they would have been if inflation forecasts over
the past two years had been correct. Financial support for
students will also continue to be determined by random errors in
inflation forecasts. If inflation again turns out higher than
forecast students will lose; while if inflation comes down faster
than expected they will gain. This is not sensible policy.
Ben Waltmann, Senior Research Economist at the Institute
for Fiscal Studies, said:
“The most important part of today’s announcement is that the
government has allowed the large cuts to student support since
2020/21 to become baked in. This means that merely due to
inflation being higher than forecast, students from the poorest
families will be entitled to £1,500 a year less in maintenance
loans than if inflation forecasts had been correct.”
Kate Ogden, Senior Research Economist at the Institute
for Fiscal Studies, said:
“The government’s framing of this announcement as a ‘cost of
living boost for students’ is at best highly misleading.
Maintenance loan entitlements will still be much lower in real
terms than in 2020/21 in both this and the next academic year. At
around £10 per student, the one-off additional hardship funding
this year is a drop in the ocean. The continuing freeze in
tuition fees, which was already announced in February last year,
does not help students with their living costs at all and in fact
squeezes the finances of the same universities that the
government expects to step up support for students.”
