‘It’s a hidden nasty’: Parents in dark over need to top up student loans

Students who live in Halls of Residence, at Jesus College Cambridge. The personal finance expert Martin Lewis says it is ‘an absolute abomination’ the government is keeping quiet about how much extra most families must pay.

How many parents realise that if their child goes to university, the government expects them to stump up thousands of pounds a year on top of the debt their offspring will incur from loans?

According to the latest submissions to the current review of HE finance, the government is keeping parents in the dark about this. The review will decide whether and how the current fees and loans system should be changed.

The government abolished maintenance grants, designed to cover costs such as food, rent and books, from the 2016-17 academic year. They were replaced by loans – in addition to the £9,250 a year tuition fee loan – with students from the lowest income families able to borrow the most.

Many argue that it is indefensible that students from the poorest families now leave university with the biggest debts – an average of £57,000 according to an analysis by the Institute for Fiscal Studies last year. And the National Union of Students says that many working-class students still don’t have enough money to cover their daily needs, with many struggling to pay for food or heating.

But experts also say the government is betraying students from middle-income families, by “refusing” to warn parents that they are expected to top up the loans for living costs. This can be as much as £4,500 a year for parents of students living outside London, and up to almost £5,000 a year for those in the capital.

In its submission to the higher education funding review last week the Higher Education Policy Institute thinktank attacked the government for failing to publish any information about these costs. Hepi’s director, Nick Hillman, said: “It’s a hidden nasty in the system. Most families don’t have £4,500 just lying around.”

Martin Lewis, founder of the consumer website Moneysavingexpert.com, which has published its own breakdown of expected parental contributions, says it is “an absolute abomination” that the government is leaving parents in the dark.

“If you aren’t entitled to a full maintenance loan, parents are expected to make up the gap, but what is outrageous is that the Student Loans Company tells you nothing at all about this,” he says. “It leads to friction in families and to students being underfunded.”

Many families will just be trying to get to grips with university living costs as they apply for student finance – the deadline for which is this month. Rachel Wylie, from Wells in Somerset, whose daughter is hoping to start a textiles degree at Loughborough University in the autumn, says: “We’ve been to information evenings at school and they told us the government assumes you will top up the loan, but the Student Loans Company didn’t make that clear. If I hadn’t turned up I simply wouldn’t know.”

Wylie, who works in health education, says: “We’ve had a university savings pot, but it isn’t enough money to cover everything, so we are definitely going to have to make some sacrifices.”

She says that even if her daughter were entitled to the maximum loan for living costs it wouldn’t cover the full costs of living in halls of residence.

Claire Callender, professor of higher education at Birkbeck, University of London, and at University College London’s Institute of Education, says: “I think one of the problems for the government is the politics behind telling parents – who are of course voters – exactly how much money they should contribute.”

She adds that parents may resent the government telling them how much they have to put in from their own pockets – especially if they can’t afford it.

A report on poverty among working-class students by the National Union of Students last month found the new maintenance loans “routinely” fell short of funding average student living costs, with many students unable to pay for enough food or heating.

Ruth Wilkinson, president of Kent University Students Union, says: “I know students who are living hand to mouth. They are working as hard as they can in paid jobs in addition to their studies, and every spare penny after paying for their accommodation goes on food.”

She adds: “We end up talking to some of the students who are really struggling because they turn up to our events knowing there will be free food. They aren’t paying for heating in winter as that’s a luxury. They are living in damp, mouldy flats trying to study.”

The NUS says that the cost of renting a room in student halls has soared in recent years, and now typically exceeds what is affordable with the government maintenance loan. They are calling for universities to demonstrate that they provide some cheap accommodation for lower income students as part of the access and retention agreements they have to make with the government’s access regulator.

The NUS and the vice-chancellors’ group Universities UK have both called on the government to reinstate maintenance grants. Last week Hepi described the abolition of grants as “a big error”, and backed calls for them to be brought backYet the think tank noted that this could cost taxpayers in the region of £2 billion a year.

But Lewis argues if there are limited funds this shouldn’t be the top priority. “If you want social equality you’ve got to face the fact that students haven’t got enough money to live on. The loans aren’t big enough. So I wouldn’t lower tuition fees, or bring back maintenance grants, I’d boost maintenance loans.”