University cost of living jumps by 8.7% in a year

• Ahead of A-level results day on Thursday (17 August 2023), interactive investor explores the uptick in the cost of living for students.

The cost-of-living squeeze was more acutely felt by students than the average household over the last academic year, new analysis by interactive investor finds.

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Using the latest inflation and housing rental data from the Office for National Statistics (ONS), ii calculates that there has been an 8.7% increase in the cost of student basics over the past year to June 2023.

The calculation is based on a mean average factoring in the rates of inflation across categories of expenditure common among students.

This outstrips the 2.3% rise in the maximum student maintenance loan in the 2022-23 academic year and is higher than the rate of inflation for UK households on average (7.9%).

The inflation figure for the average student factors in price changes from a list of 18 goods and services ranging from rent, food, and energy through to the cost of books, public transportation and going out.

High energy and food bills were the biggest inflation drivers for students – as for the broader population – up 22.3% and 17.3%, respectively, ahead of non-alcoholic drink (16.9%).

The cost of student essentials also saw significant percentage increases: the cost of books rose by 14.1%, while the cost of telephone and telecommunication services (which includes the cost of running a mobile phone and internet access) grew by 9.5%.

There were also notable hikes in fares for public transportation – up 6.5% for train journeys and 4% for bus and coach. Meanwhile, the cost of running a car fell over the 12-month period to end of June, led by a large fall in the price of motor fuels (diesel and petrol down 24.3% and 22.3% respectively).

The cost of going out also grew – with dining at restaurants and cafés up 9.1% over the period, while the cost of going to the cinema/theatre/concerts and attending a sporting event grew by 4.6%.

With the cost of living expected to remain elevated for the foreseeable future, student loans are likely to continue to fall short of covering the uptick in living costs.

Maximum loans for living costs for new full-time undergraduate students and eligible continuing full-time undergraduate students starting their courses will be increased by 2.8% in 2023/24 academic year.

The equivalent loan rate for students living away from home and studying in London will be £13,022, for those living in the parental home during their studies, £8,400 and for those studying overseas as part of their UK course, £11,427.

Source: interactive investor using ONS inflation and Index of Private Housing Rental Prices (to June 2023)

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The need to maintain financial resilience amid the biggest cost-of-living crisis in generations has robbed students of the university life they envisaged. Mounting cost pressures could trigger stress and anxiety, impacting overall well-being and academic performance.

“The increase in the maximum loan for living costs for students did not come close to covering the growth in prices over the past academic year. Many students have been forced to make further cutbacks to their typically slim budgets to maintain financial buoyancy, while some have gone a step further by taking on paid work during term time to support their studies.

“With inflation expected to remain elevated for some time to come, returning students could suffer a new wave of financial distress. For new students, it can be a baptism of fire into university life.

“At a time when MPs are debating the value of university degrees, the cost-of-living shortfall compounds myriad financial pressures ranging from high tuition fees to a heightened loan repayment burden that puts students at risk of being priced out of university.”

Saving tips for students

Myron Jobson outlines cost-cutting tips for students:

Budget

The first step is to establish a budget that reflects your income and expenses. Track every coin that flows in and out and identify areas where you can reduce spending without compromising your needs. Prioritise essentials and limit discretionary expenses.

Look out for exclusive student deals

There are loads of deals exclusively available to students, to help make their money go further. Such deals tend to be a percentage off the total price but could also include offers such as free trials or buy-one-get-one-free. 

Available student discounts are not always made obvious by companies, so often students need to ask the question.

Shop around for the best deals

You won’t know whether you are paying over the odds for things unless you shop around for the best deals. For example, if you've been with a broadband provider for a while, it is likely that any introductory offers will have expired, and you might be paying more than you need to. The same goes for mobile phone contracts. Shop around to see if you can get a better deal.

Find a part-time job if time permits

If time permits, seek part-time jobs or freelancing opportunities that align with your interests and schedule. Earning some extra income can significantly ease financial burdens.

Buy used textbooks

When it comes to textbooks, explore cost-effective alternatives. Consider buying used or digital versions or explore campus book exchanges to cut down on academic expenses.

Mindful energy use

Mindful energy usage not only benefits the environment but also helps lower utility bills. Turn off lights, unplug devices, and use appliances efficiently to reduce expenses.

Review subscriptions

Review your subscription services and identify those you rarely use. Cancelling non-essential subscriptions will save money without sacrificing much.

Remember - financial support is available

Students struggling financial needn’t suffer in silence. Don’t be afraid to ask for support. There are advice and hardship funds are available at several universities. There are additional funds for those who need extra financial help as well as for students with children or dependent adults and students with disabilities. Students can also access cost-of-living support funds distributed by local councils to support residents struggling financially.