Will scrapping maintenance grants deter poorer students?

Blog posts

8 Jul 2015

Jim Hillage and Emma Pollard

The decision today by the Chancellor to replace student maintenance grants with loans from 2016-17, to be paid back once people earn more than £21,000 a year, is a bold one. It may backfire in the long term if students from low-income households are deterred from going to university.

The fact that the percentage of UK-domiciled, young, full-time first degree entrants from lower socio-economic backgrounds had increased despite the introduction of the £9,000 tuition fees had been used by the previous Government to justify the high fee approach. The policy aim has been to widen as well increase participation. The increase is likely to have been due, at least in part, to the role that maintenance grants played in supporting the finances of students from less well-off backgrounds.

Maintenance grants (in their current guise) were re-introduced by the Labour Government in 2006 to help students from low-income families with their living and housing costs, depending on their status and personal/household income.

When IES and NatCen published the last authoritative student finance survey for the Department of Business, Innovation and Skills in 2012 (when full-time students could be charged up to £3,375 for tuition fees), we found that maintenance grants were taken up by those most in need: Two in five (40 per cent) students received income from a non-repayable grant to help with living costs. The average amount received in grants (for those who received grant support) was £2,157 at a time when the maximum grant available was £2,906. Those most likely to receive a grant were from families with routine or manual work backgrounds or those with parents who had not been to university (often termed first generation HE students), indicating that the targeting of grants was working: 55 per cent of those from routine or manual work backgrounds received a grant and 51 per cent of first generation HE students.

However, the grant only covers just over a fifth of an average student’s living and housing costs. To make up the difference, students take out further loans, do part-time jobs or rely on their families. Whilst there is little difference in doing paid work whilst studying, students from less advantaged backgrounds are more likely to take out Student Loans for maintenance, (79 per cent of those from routine or manual work backgrounds took out a maintenance loan); and are less likely to get any or much financial support from their families whilst studying.

Student financial support is important as a quarter of students, more from low-income households, said they would not have studied at all without the student funding and financial support available.

These are old data but in broad terms are still likely to be applicable to students today and we’ll know more about the current situation later in the year when our latest Student Income and Expenditure Survey, based on data from almost 7,000 undergraduate students, will be published. However it will take a few years before we will be able to see whether potential students are put off going to higher education by these latest changes in financial support.

May be they’ll take up one of the three million new apprenticeship places instead.