Martin Lewis has been known to campaign for financial causes as the Money Saving Expert pushes for fair outcomes for the nation’s savers. Today, MoneySavingExpert.com (MSE) has revealed its founder has issued his latest calls for change.
Martin has written to ministers responsible for student finance in England, Northern Ireland and Scotland, urging them to stop hiding the university parental contributions that are built into the UK’s student finance system.
MSE detailed while much is written about tuition fees, the “biggest practical problem most students face is that the amount they get for living expenses is slashed based on parental income – but students and parents get no warning that this gap needs filling.”
According to MSE’s analysis, action is needed before the start of the new academic year in September, when hundreds of thousands of new students begin their courses and millions more return – many of whose families will have seen their financial position deteriorate as a result of the pandemic.
MSE broke down what the parental contribution is, how it is hidden and how the system at large is failing.
What is the parental contribution?
MSE explained: “For current and prospective university students aged under 25, the value of the maintenance loan and/or grant they get to cover living costs is dictated by their household’s income – for most, this is a proxy for parental income.
“The higher their income is, the less the student gets to cover costs.
“In England, where all the available support is in the form of a maintenance loan, the amount a student gets will start to reduce when total family income is just £25,000 a year, and by the time it’s about £60,000 a year it can be halved.
“Logic implies that parents are expected to contribute to fill the gap – as that’s the only factor that impacts the amount received. For students from England, this can add up to more than £15,000 over a standard three-year course”
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How is the parental contribution hidden and how is the system falling short across the UK?
MSE continued by examining how the contributions are “hidden”: “There is little mention of the parental contribution in official student finance documents around the UK – students get a letter telling them what their living loan (and/or grant) is, without indicating that it has been reduced, never mind by how much, due to the household income means test.
“This leaves many heading off to university without knowing their loans are a fraction of the full amount. Martin has met students whose parents won’t give them money as ‘it’s about learning independence’, without realising their loan’s been halved on the expectation their parents would fill the gap.
“For years, MSE and its founder Martin have campaigned to raise awareness of this hidden parental contribution. The UK government-commissioned Augar report on higher education, published in 2019, supported and included Martin’s suggestion that the Student Loans Company begins to make the contribution explicit. It also noted that only 15 percent of parents give their children the expected amount or more.
“But in its interim conclusion to the review, published in January 2021, the Government did not mention the parental contribution, leading to the worry that unless more pressure is applied, little will happen – which is why Martin is calling for action today. He has written to the Minister of State for Universities, Michelle Donelan MP, along with the ministers responsible for student finance in Northern Ireland and Scotland (there is no expected parental contribution in Wales).”
MSE went to break down specifically how the system is falling short, as the following details:
- Official documentation for students in England (where all the support is via a maintenance loan) says only that depending on their income, parents “may have to contribute” towards their children’s living costs while at university, which isn’t likely to be very helpful in practice. Students aren’t explicitly told how and why their loan has been reduced, or how much their parents need to contribute. In Northern Ireland and Scotland, family income dictates the total amount of support received and how much of that support is a loan versus a non-repayable grant
- The Student Finance Northern Ireland guide “How you are paid 20/21” previously said: “The Student Loans Company (SLC) will send you a letter telling you how much support you can get and the contribution (if any) you and your family are expected to make towards your living costs.” Yet despite this being exactly the right policy, the SLC confirmed it was never implemented and the guide was later amended to remove the reference to a letter being sent.
- Scotland’s Student Information website is clearer that parents are expected to contribute – but it doesn’t give exact figures and, as in England and Northern Ireland, this information is absent from letters students receive about their loans.
Martin concluded on this with the following comments: “Politicians love to argue about tuition fees, conveniently ignoring by far the biggest practical problem most students face – do they have enough money to live off?
“Many don’t, but a prime cause is hidden. The system has an implicit parental contribution – the loan and possible grant they receive depends on their family’s income. The more families earn, the less they get. For those who analyse the system, it’s transparent that it works this way. But with the pandemic exacerbating student financial problems, it’s about time that transparency was extended to students and their parents.
“To not make this explicit and explain how it works risks immense stress on relationships between parents and their children, leaving them unable to plan financially – often over several years – with many families complaining that ironically, the living loan isn’t enough.
“I’ve met students living off a pittance, because their parents thought – ‘it’s time to stand on your own two feet’ – not realising the government expects them to help. Whether or not you agree with how the system works, at the very least, it needs to be honest.”