Maintenance loans fuel student debt

According to the National Student Accommodation Survey 2020, students in Britain are inadequately supported by the government’s funding scheme, and as a result have to take on commercial or personal debt to pay rent. The survey of 2,168 students painted a grim picture of students’ ability to live off the average Maintenance Loan, driving them to borrow money, frequently at punishing rates.

One third of undergraduates (36%) use loans, overdrafts and credit cards to pay their rent while at university. If the number of students who borrow from family, friends and employers is included, up to 60% of students borrow to pay their rent.

In theory, students should be able to live off the Maintenance Loan for both their food and their rent. According to a freedom of information request by Save the Student, the average Maintenance Award is £540 per month, which is supposed to cover both rent and food. However, the average cost of rent in university halls is £568 and the average outside halls is £547.82, leaving students to scramble for the remainder of their rent plus the cost of their food.

Stories abound of students taking out payday loans to pay landlords, multiple accounts in overdraft and maxed-out credit cards, which have uncapped interest rates, late repayment fees and credit score damage. Over half (54%) of undergraduates find the stress of inadequate funding negatively affects their health.

Students turn first to parents to make up the shortfall. On average, parents contribute £2,542 per annum to pay the rent. Half of all students borrow money from their parents and friends, over a quarter (28%) borrow through overdraft or loans, 7% are able to borrow from the university, 6% put money on their credit card, 2% use payday loans and 1% ask their employer for a loan to study.

Jake Butler, money expert for Save the Student, said, ‘The Maintenance Loan isn’t enough to live on and, evidently, most of it goes to landlords. The system is long overdue government reform.’ It may not be what the students go to uni to learn, but paying the rent might be their hardest lesson.

Photo by Cole Keister on Unsplash

Article is accurate at date of writing.