Parents of students starting university in England in 2016, are facing a hidden 27% rise in university costs. We've been working on this for a few weeks, and as part of our campaign for a more transparent system of student finance, I have today sent an open letter to Jo Johnson, Minister for Universities, asking for him to urgently consider a change in the system. Here's the text...
Monday 26th September 2016
Dear Minister,
I am writing to ask you to ensure there is explicit bespoke information given to parents on how much the government expects them to contribute towards the cost of university education. This is especially pertinent due to the large increase in these amounts for new 2016 starters.
Almost every 18-year-old school leaver - while able to vote, join the army, marry and apply for a credit card (all the freedoms of adulthood) - still sees their university maintenance loan dictated by a means test of their parents' residual income. The reduction in this living loan starts for those from families with incomes as little as £25,000 a year and loans can be halved for those whose parents earn £60,000.
The implicit premise is that parents will fill the gap, but implicit isn't good enough, this must be made explicit. The only thing I can find from the Student Loans Company is within its guide to how you're assessed and paid; it says "depending on their income, parents may have to contribute towards the living costs of their student children."
However if the state's policy is to incorporate a parental contribution into the system (ignoring whether that in itself is fair), the bare minimum requirement must be that parents should be loudly told about it, including exactly how much they are expected to give.
Therefore, I'd ask that you consider mandating the Student Loans Company to prominently include in students' entitlement letter (and any other relevant communication) something akin to...
"Students - your loan for living is £x,xxx a year, this is less than the full loan and we expect your parents to make up at least the £x,xxx difference."
This lack of information has, of course, been an issue for years, yet it's now more of a concern than ever, as this year you have substantially increased the amount and proportion of the loan being means tested. Some parents of 2016 starters are expected to give 27% more than those in a similar position in 2015, with rises of over £800 possible.
This is not a trivial issue. It's often said "you don't need to pay upfront to go to university", but the sharp rise of means testing for maintenance loans means that is no longer true for many. For a large number of students the living loan received simply won't be enough to cover even basic accommodation costs.
At the very least, explaining to students that their parents are meant to fill the gap would be honest and transparent (and frankly even with the full parental contribution, and this year's increase in the size of living loans, I still have concerns that these loans do not fully cover the basic cost of living for some students).
The lack of transparency and clear guidance causes friction between students and parents. It also leaves some students in a dire position. While parents are supposed to contribute, many can't or don't, or they see the amount as loose. This leaves some students risking unmanageable debts or dropping out of university over cash flow issues.
Alongside improved communication I would also urge you to consider those aged under 25 who have no way of forcing their parents to make a contribution to their education. The criteria to be able to declare yourself "an independent student" aren't appropriate, and leave grown adults who want to study still beholden to the whims of their parents.
I look forward to your response - and hopefully action - on this matter.
Yours sincerely,
Martin Lewis
Founder & Chair of MoneySavingExpert.com
Head of the Independent Taskforce on Student Finance Information 2011-2013
This blog first appeared on Martin's blog on MoneySavingExpert.com, and can be read here