Student Income and Expenditure Survey 2007-2008
Johnson C, Pollard E, Hunt W, Munro M, Hillage J (IES), Parfrement J, Low N A (NatCen)
Research Report RR0905, Department for Innovation, Universities and Skills, April 2009
a study commissioned by the Department for Innovation, Universities & Skills (DIUS)
The 2007/08 Student Income and Expenditure Survey (SIES) was jointly commissioned by the Department for Innovation, Universities and Skills (DIUS) and the Welsh Assembly Government (WAG). The study was conducted in partnership by the National Centre for Social Research (NatCen) and the Institute for Employment Studies (IES). This report presents the findings for students from England. A separate report covers students from Wales (whose income and expenditure patterns are very similar).
The 2007/08 survey covered both full-time and part-time students at higher education institutions (HEI) and further education colleges (FEC), including the Open University (OU), participating in undergraduate courses during the 2007/08 academic year. Data were collected between January and March 2008 via:
- face-to-face interviews with a randomly selected sample of 2,686 full-time and part-time English-domiciled students at 79 institutions in England and Wales
- expenditure diaries detailing the expenses incurred by these students over the course of seven days, completed by 2,335 English-domiciled students.
- Full-time student income rose by 12 per cent in real terms between 2004/05 and 2007/08, to over £10,000 during the academic year. However, the bulk of this increase is accounted for by tuition fee loans which are paid direct to the students’ institution.
- Compared with their counterparts in 2004/05, full-time students are less reliant on parents and paid work for income and more dependent on sources of government financial support ie loans and, increasingly, grants.
- Full-time students’ expenditure on fees has risen, particularly for first year students under the new finance arrangements, for whom the direct costs of attending university have risen by 68 per cent. However, spending in real terms on living and housing costs has not changed in the last three years.
- Estimated debt levels for full-time students graduating in 2008 were around £7,800 although this will rise for those in subsequent years as a result of additional accumulated borrowing in tuition fee loans among students studying under the new system of student finance. Debt is mainly funded by student loans: the amount borrowed from commercial sources has fallen among full-time students.
- Income among part-time students has risen by eight per cent in real terms to around £13,500, while overall spending is up two per cent in real terms.
Full-time students’ average (mean) total income during the 2007/08 academic year was £10,425. Part-time students received around 30 per cent more than full-timers, on average, with a total income of £13,511 – higher due to their greater earnings from paid work during the academic year.
Among both full and part-time students, average total incomes and their composition varied considerably between different types of students and especially by household/family type (linked to age), ethnicity, and social class. It was generally highest among those with dependent children; while those with the lowest incomes were often students from black and minority ethnic groups.
Among full-time students, those covered by the new support system had a higher average total income than those under the old support system (mainly linked to their higher income from tuition fee loans, which are paid direct to the institution). If income from tuition fee loans and tuition fee support is discounted, the total average income for new system students is around eight per cent higher than that for students studying under the old system.
Income from loans and other forms of support
Student loans for maintenance and tuition fees were the most important source of income for full-time students, contributing 38 per cent of total average income. They contributed two-fifths of average total income among new system students (41 per cent) and one-third of the total among old system ones (31 per cent).
Among full-time new system students (who have higher tuition fees), income from the student loan for tuition fees amounted to £2,237 (accounting for 20 per cent of total average income). Three-quarters of new system students had taken out a loan and among these, the average was £2,934 – very close to the maximum of £3,070. It should be noted that income from tuition fee loans is paid direct to the institution rather than to the individual student.
Income from the student loan for maintenance accounted for one-quarter of the total income among all full-time students, contributing £2,492 on average.
Two in five (41 per cent) new system students received income from the Maintenance Grant, at an average of £2,088 per recipient. Two per cent of new system students received the Special Support Grant (SSG) – over half of whom were lone parents.
One-third of full-time new system students studying in England benefited from an institutional bursary (35 per cent, compared with four per cent of their old system counterparts), with recipients getting £980 on average.
Students from routine/manual social class backgrounds relied more heavily on income from sources of student support such as loans, grants and bursaries, whereas those with professional/managerial social class backgrounds relied more on contributions from their family and friends (predominantly parental contributions).
Earnings from work
Income from paid work was important for full-time students (averaging £2,108 overall, and representing 20 per cent of their total average income) and it was critical for part-time students (averaging £9,580, comprising 71 per cent of their total average income).
Just over half of all full-time students did some form of paid work during term-time (53 per cent). Working was most common among students who lived at home with their parents during term-time, those married or living as a couple without children, students with no immediate family history of HE, those studying education degrees, and those in their intermediate years of study. There was no significant difference in propensity to work between new and old system students.
Half of part-time students and around one-third of full-time students who worked during the academic year reported that this had affected their studies. The most common impacts among both were less time available for study/reading, and more stress/higher workload (raised by part-time students in particular).
Income from family and friends
On average, full-time students received £2,045 from their family, partner and friends – this accounted for one-fifth (20 per cent) of their average total income, equal with income from paid work. Although they received similar amounts (£2,279 and £1,893 respectively), old system students relied relatively more on this source, which accounted for 25 per cent of their total income compared with 17 per cent among new system students.
Across old and new system students alike, those who gained the most from family, partner and friends tended to be from more ‘traditional’ student backgrounds – younger, dependent students living away from home to study, from managerial/professional social class backgrounds.
The average (mean) total expenditure of full-time English-domiciled students in 2007/08 was £12,254. The average total expenditure of part-time students was around 34 per cent higher at £16,435.
Living costs constituted the largest category of spending for students, averaging £6,496 for full-time students and £10,522 for part-time students (amounting to 53 per cent and 64 per cent of their spending, respectively). Among full-time students, living costs were highest for parents (particularly lone parents), and those from a routine/manual/unemployed socio-economic background. Among part-time students, those studying at HEIs or the OU, those not studying in their first or final year and those studying education or subjects allied to medicine reported the highest living costs.
Participation costs (incurred as a part of going to university or college) accounted for a higher proportion of expenditure for full-time students than for part-time students (26 per cent compared with 12 per cent). Full-time students under the new system of student finance (including ‘top up’ fees) had higher participation costs, and higher spending overall.
Housing costs accounted for 20 per cent of spending among full-time students and among part-time students. Full-time students typically lived in rented (non-university) property with friends or other students, with their parents or relatives or in university-provided accommodation: these groups reported particularly low housing costs. Part-time students were more likely to be buying or privately renting a property (alone or with family) and this is reflected in their higher overall housing costs.
Overall financial position
Predictions for savings levels at the end of the academic year were remarkably similar among full- and part-time students at £2,553 and £2,513 respectively. Key differences in the level of savings were found for students from different socio-economic backgrounds, different family circumstances and different ethnic backgrounds.
Levels of borrowing among full-time students were over three times higher (at £8,889) than among part-time students. In addition, full-time students were considerably more likely to borrow money (93 per cent had some form of borrowing compared to 62 per cent of part-time students). Full-time students’ borrowing was predominantly made up of student loans (£7,961 out of £8,889). However some full-time students had borrowed from commercial or ‘higher cost’ sources such as commercial credit companies (16 per cent) and via bank overdrafts (41 per cent), and where students had made use of these sources, the average amounts involved were substantial (£2,745 and £1,001 respectively).
Anticipated debt levels for 2007/08 graduates averaged £7,798 for full-time graduates and £441 for part-time ones. Estimated net debt on graduation varied considerably in a number of ways, reflecting many of the variations noticed for savings and borrowing patterns. In particular, among full-time students relatively higher net debt was predicted among students from routine and manual work backgrounds and those living away from their parental home.
It is expected that students in their first or second year of study, under the new student finance system, will on average graduate with greater debt. At the end of their first year of study, students in 2007/08 finished for the summer vacation with around £3,518 in net debt, compared with £2,415 (uprated) for first year students in 2004/05.
Around one in three students (32 per cent full-timers and 31 per cent of part-timers) said that the availability of funding and financial support affected their decisions about HE, and 25 per cent of full-time and 31 per cent of part-time students said that concerns over debt nearly stopped them coming. Most said that they would not have studied at all without financial support. New system students were more likely to have had concerns about debt than old system students. Nearly half of all part-time students (45 per cent) said that availability of funding affected their decision to study part-time. The cost of tuition fees was less influential, however it affected part-time students notably more than full-time students (23 per cent compared with 16 per cent respectively).
Almost three in five full-time students (56 per cent) felt that finance had affected their academic performance (eg through increased worry or stress), although only one in ten (nine per cent) felt it had done so a great deal. Part-time students were less likely than full-timers to feel their performance had been affected by financial concerns (41 per cent).
Despite concerns over finance, the vast majority (91 per cent) of students had not fallen into arrears on any credit card bills, utility bills or rent.
Lone parents appeared to feel particularly vulnerable. A quarter of full-time students who were lone parents felt financial difficulties had affected them a great deal and this group had amongst the highest level of arrears of any full-time students.
Most students felt that their HE experience was equipping them for the demands of working life, would lead to higher salaries and was worthwhile despite its high cost. Nevertheless, 60 per cent of full-time students had concerns about increasing competition in the graduate job market – slightly more than in 2004/05 (56 per cent).
Comparisons with the previous survey
Comparisons are made between all students (for both 2004/05 and 2007/08), but also between first year students across each survey. Most first year students in 2004/05 studied under the old student finance system, whereas most in 2007/08 studied under the new system. This means that the best way to compare the two funding systems is via comparison of ‘like for like’ students in the same year of study, across the two surveys.
Compared with SIES 2004/05:
- Full-time student income has increased by around 12 per cent in real terms – mainly due to higher income from tuition fee loans, which is in fact paid direct to the institution. Part-time income rose by eight per cent in real terms during the same period.
- The main sources of student support include maintenance and tuition fee loans, and the maintenance grant, whereas other sources include more targeted forms of support as well as support from HE institutions (including bursaries) and employers. Average income from the main and other sources of student support increased much more for first year students than for other students. At the same time, first year students received less income from paid work and from family and friends.
- There has been no change in full-time or part-time students’ average earnings from paid work during the academic year, in real terms. However, first year students in the 2007/08 academic year earned 16 per cent less largely due to a lower proportion of first year full-time students who did any paid work (49 per cent in 2007/08, compared with 58 per cent in 2004/05).
- The total average expenditure of full-time students went up by seven per cent in real terms – driven by a 43 per cent increase in participation costs (including a 68 per cent rise for full-time first year students). Living, housing and child-related spending costs remained very similar to 2004/05 (decreasing by between one and seven per cent).
- Tuition fees for full-time students rose by 76 per cent in real terms and more than doubled for first year students. The cost of tuition fees rose by 25 per cent for part-time students.
- Average borrowing increased for full-time students due to substantial increases in student loan debt. Although there were modest increases in savings, the overall impact on students’ financial position was to increase the level of predicted student (net) debt.
- Across all part-time students, borrowing levels have fallen since 2004/05.
- Current full-time students are no more likely to consider dropping out or leaving their courses early, nor to cite financial reasons for doing so.
- The proportion of full-time students falling into arrears has declined. Reliance on high cost forms of borrowing has fallen, particularly among first year students operating under the new student finance system, but has remained constant among part-time students.
- The proportion of full-time students who reported that student funding affected their decisions about HE study (either positively or negatively) rose, while the proportion of full-time students who reported that concern over debts almost stopped them coming to university remained the same. Among part-timers, there was a small increase.
- Fewer full-time students agreed that ‘the long term benefits of HE are greater than the costs’ (82 per cent in 2007/08 compared with 86 per cent in 2004/05). However the reverse was true among first year students (an increase from 84 to 89 per cent). Among part-time students the proportion agreeing that ‘the long term benefits of HE are greater than the costs’ declined (from 81 to 74 per cent).
- That is, taking into account increases in the Retail Price Index since 2004/05.
- The proportion of 43 per cent of students getting the Maintenance or Special Support Grant is not directly comparable to the proportion published by the Student Loans Company (57 per cent), which covers a different eligible population.
- Including tuition fees.
Student Income and Expenditure Survey 2007-2008: English-domiciled students, Johnson C, Pollard E, Hunt W, Munro M, Hillage J (IES), Parfrement J, Low N A (NatCen). Research Report RR0905, Department for Innovation, Universities and Skills, 2009.
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