Adding up the hidden costs of university

The debate around affordable higher education usually revolves around tuition fees - but there are far greater costs to going to university.

The debate around the cost of university is extremely misleading. All the focus is on tuition fees, with little or no mention of accommodation costs and living costs. Moreover, there are hidden costs which are not factored into even these categories. All of this means that the real financial situation for aspiring students from disadvantaged backgrounds is far more problematic than any commentary currently acknowledges.

First, it is important to note the real total of an undergraduate degree. As already stated, the debate in the media centres around tuition fees as if this represents the full price of a degree. However, this is a mere fraction of the cost. Living costs and accommodation costs are both huge expenses that are very rarely mentioned. A conservative estimate of living costs is around £3,500 - around £1,150 per term. Most housing costs around £400 per month, which equates to £4,800 per year. The prediction that allowing an increase in the tuition fee cap would create a market has been proved woefully inaccurate. House of Commons Library statistics show that for the academic year 2012/13, the average tuition fee was £8,400. This is only reduced to £8,100 when factoring in fee waivers. So an estimate of the overall cost of one year of undergraduate education at an average university is £16,700.

Second, we must establish the standard support given by Student Finance for students from low-income families. Tuition fees are automatically given as a loan which students only start paying back once they start working. In determining the financial situation of university undergraduates we only need to look at the other two expenditures: living costs and accommodation costs. Going on the estimates made above, this works out at roughly £8,300 per year. However, even for the most supported students, with household incomes under £25,000, there is only one payment to cover these two costs. The maximum maintenance payment, which includes the maintenance loan and grant, is currently £7,177. This leaves an initial black hole of over £1,100.

In addition to this initial funding deficit, there are a number of practical barriers which increase the financial burden further. For example, the figure for accommodation costs does not include a deposit - for most properties this is one months rent plus 100 pounds. Nor, indeed, does this include a cost for an agency fee. This is unlikely to be necessary in the first year when most students live in university accommodation, but in subsequent years this is very common. The agency fee is at least £100, bringing the black hole to £1,700. What's more, the deposit is only returnable after an inspection upon vacating the rented premises. The result of this is the requirement for a further expense of £600, as the next year’s accommodation has to be secured well in advance of receiving the initial deposit back. While the deposits are returned, it still requires students from low socio-economic backgrounds to find the money before it is returned. This brings our black hole total to £2,300.

The fact that this deficit must be filled by the institution creates a complex variety of potential situations, making it incredibly difficult for students to calculate the exact funding gap they will experience. Very few universities can fully ameliorate the funding gap. The University of Manchester, a member of the Russell Group, provides a significant amount of support to eliminate the deficit. Over a third of their undergraduate intake, which is approximately 8,000 per year, receives the ‘Manchester Bursary’. Students with family household incomes below £25,000 are eligible for £1,000 cash grant, and £2,000 in an accommodation discount. This support is sustained throughout their degree. However, this is the exception as most institutions are not wealthy enough to afford this level of support.

The University of West England (UWE), a former polytechnic, has had to dramatically reduce the support it offers students from low socio-economic backgrounds. The money it receives from the Access to Learning Fund has decreased significantly in recent years. In 2006/07, UWE had a fund of £944,544 to distribute through bursaries. In 2012/13, the figure had dropped to £552,358. The consequence of this can be seen in the number of students receiving a bursary. In 2011/12, there were 2,500 students eligible. This figure has fallen to 1,000 in the academic year 2012/13. As a result, a large number of students who meet the criteria for a bursary will obtain no help in narrowing the hole in their finances. However, the UWE bursary is only £1,000, leaving even the lucky students who receive a bursary in a deficit of around £1,300.

For new universities, the situation is even worse. The University of Gloucester, which acquired university status in 2001, offers virtually no support to plug the gap in student finances. For the academic year 2013/14, the institution will offer 206 scholarships through the National Scholarship Programme (NSP). This scheme is worth £3,000 in the first year of study, and £1,500 for all subsequent years. However, this support takes the form of fee waivers. This means that it has no impact on the financial black hole. Students not eligible for the NSP receive a bursary of £500, but only in their first year of study. The consequence of this is that students from low-income families have virtually no support in meeting the immediate funding gap.

These figures will vary according to institution and geography, there is no doubt that most low-income students have a large funding gap of well over £1,000. The amount varies significantly depending on institution and geography (regional prices and diverse travel costs), reaching anything up to £2,500. And this does not even factor in the impact of inflation. According to the Bank of England, the Consumer Price Index has averaged 3.4 per cent over the last 6 years. The impact of this being that every student is taking a real terms funding cut, year after year. If we are serious about increasing diversity and participation, the financial funding deficit for students from low socio-economic backgrounds urgently needs to be addressed.

Students graduating from the University of Birmingham. Photograph: Getty Images.
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Universal Credit takes £3,700 from single working parents - it's time to call a halt

The shadow work and pensions secretary on the latest analysis of a controversial benefit. 

Labour is calling for the roll out of Universal Credit (UC) to be halted as new data shows that while wages are failing to keep up with inflation, cuts to in-work social security support have meant most net incomes have flat-lined in real terms and in some cases worsened, with women and people from ethnic minority communities most likely to be worst affected.

Analysis I commissioned from the House of Commons Library shows that real wages are stagnating and in-work support is contracting for both private and public sector workers. 

Private sector workers like Kellie, a cleaner at Manchester airport, who is married and has a four year old daughter. She told me how by going back to work after the birth of her daughter resulted in her losing in-work tax credits, which made her day-to-day living costs even more difficult to handle. 

Her child tax credits fail to even cover food or pack lunches for her daughter and as a result she has to survive on a very tight weekly budget just to ensure her daughter can eat properly. 

This is the everyday reality for too many people in communities across the UK. People like Kellie who have to make difficult and stressful choices that are having lasting implications on the whole family. 

Eventually Kellie will be transferred onto UC. She told me how she is dreading the transition onto UC, as she is barely managing to get by on tax credits. The stories she hears about having to wait up to 10 weeks before you receive payment and the failure of payments to match tax credits are causing her real concern.

UC is meant to streamline social security support,  and bring together payments for several benefits including tax credits and housing benefit. But it has been plagued by problems in the areas it has been trialled, not least because of the fact claimants must wait six weeks before the first payment. An increased use of food banks has been observed, along with debt, rent arrears, and even homelessness.

The latest evidence came from Citizens Advice in July. The charity surveyed 800 people who sought help with universal credit in pilot areas, and found that 39 per cent were waiting more than six weeks to receive their first payment and 57 per cent were having to borrow money to get by during that time.

Our analysis confirms Universal Credit is just not fit for purpose. It looks at different types of households and income groups, all working full time. It shows single parents with dependent children are hit particularly hard, receiving up to £3,100 a year less than they received with tax credits - a massive hit on any family budget.

A single teacher with two children working full time, for example, who is a new claimant to UC will, in real terms, be around £3,700 a year worse off in 2018-19 compared to 2011-12.

Or take a single parent of two who is working in the NHS on full-time average earnings for the public sector, and is a new tax credit claimant. They will be more than £2,000 a year worse off in real-terms in 2018-19 compared to 2011-12. 

Equality analysis published in response to a Freedom of Information request also revealed that predicted cuts to Universal Credit work allowances introduced in 2016 would fall most heavily on women and ethnic minorities. And yet the government still went ahead with them.

It is shocking that most people on low and middle incomes are no better off than they were five years ago, and in some cases they are worse off. The government’s cuts to in-work support of both tax credits and Universal Credit are having a dramatic, long lasting effect on people’s lives, on top of stagnating wages and rising prices. 

It’s no wonder we are seeing record levels of in-work poverty. This now stands at a shocking 7.4 million people.

Our analyses make clear that the government’s abject failure on living standards will get dramatically worse if UC is rolled out in its current form.

This exactly why I am calling for the roll out to be stopped while urgent reform and redesign of UC is undertaken. In its current form UC is not fit for purpose. We need to ensure that work always pays and that hardworking families are properly supported. 

Labour will transform and redesign UC, ending six-week delays in payment, and creating a fair society for the many, not the few. 

Debbie Abrahams is shadow work and pensions secretary.