52 Virtual Brochure – February 2024 5. The Cost-of-Living Crisis and Student Hardship - Mar 2023 Sector Context Since late 2021, households in the UK, along with much of Europe, have suffered a drop in living standards. The ‘cost of living crisis’ refers to the fall in ‘real’ disposable income that is being caused predominantly by high inflation outstripping wage and benefit increases. Recent tax increases have further exacerbated the problem9. In 2022, inflation reached a record high in the UK, and this, coupled with the ongoing energy crisis, has resulted in households paying more for essentials such as food, energy, petrol and mortgages, with average increases in income and earnings not being enough to offset these cost increases. As the cost of living continues to soar, students at university are facing unprecedented financial challenges. Over the past six months, there has been much coverage in the media around students struggling financially. Maintenance loans have not increased in line with inflation (institutions are, collectively, lobbying the UK Government to review this) and annual living support for students is falling below the equivalent of the minimum living wage. In recognition of the financial difficulties facing students, the Government has provided £261 million to the Office for Students (OfS) for the 2022/23 academic year which 9 https://www.instituteforgovernment.org.uk/ 10 https://www.gov.uk/government/news/cost-of-living-boost-for-students universities can draw upon to boost their own hardship funds. An additional £15 million has also been made available, bringing the total to £276 million this academic year. The Government has also confirmed that loans and grants to support undergraduate and postgraduate students with living and other costs will be increased by 2.8% for the 2023/24 academic year. Tuition fees will continue to be frozen for a full-time undergraduate course at a maximum of £9,250, which will reduce the initial amount of debt students take on. From the 2023/24 academic year, the Government is to cut interest rates for new students to RPI only so that, under these terms, graduates will not repay more than they originally borrowed, when adjusted for inflation10. Universities are stepping up their efforts to support students through a variety of hardship support schemes and initiatives. Hardship funds are helping the most vulnerable students, and some universities have offered registered students a one-off payment to help with the cost of living. This briefing note examines the impact of the cost-of-living crisis on students and provides examples of hardship support initiatives identified from across the sector. According to a BBC News Freedom of Information request11, the number of students requesting hardship funding nearly tripled between 2018-19 and 2020-21 at 95 UK universities. Further to 11 https://www.bbc.co.uk/news/education-61883656
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