Students in England face ‘negative impact’ from refusal to tie loans to inflation, admits DfE

The Department for Education has admitted students in England face a “negative impact” from its refusal to increase support in line with inflation, saying they will have to cut back on food and books as a result.

In an equality analysis of the government’s decision to raise maintenance loans by just 2.8% from autumn, the DfE said student support would have needed to go up by nearly 14% to keep up with the recent rises in the cost of living.

“Our overall assessment is that these proposed changes will overall have a negative impact for students,” the DfE report concluded.

“This is because a 13.7% increase would be required to maintain the value of loans and grants for living and other costs in real terms … due to the recent spike in inflation.”

The analysis added that government’s 2.8% rise “is unlikely to prevent a further erosion in purchasing power” for students this year.

The 2.8% increase means an increase of £272 in the maximum loan for students away from home outside London. A 14% increase would have added £1,350 and maintained support at the previous level of consumer prices.

For maintenance loans to keep pace with the government’s retail prices index measure of inflation, the analysis said an 18.5% increase would be needed, adding £1,800 to the maximum loan.

“As a result, many students … will not be able to make the same spending decisions as they did previously with regards to accommodation, travel, food, entertainment and course-related items such as books and equipment, the costs of which will have been rising over time,” the DfE’s analysis said.

The DfE’s decision was based on forecasts published last year of just 2.8% inflation in March 2024. In November, the Institute for Fiscal Studies (IFS) warned that “because of errors in inflation forecasts, the poorest students will be more than £1,000 worse off this academic year”.

Tim Bradshaw, the head of the Russell Group of universities, said the DfE’s own assessment underlined the flaws in the loans system. “What’s worse is that the department responsible and [the Office for Students], which is supposed to be on the side of students, just seem to be shrugging their shoulders,” he said.

“Let’s be clear. The government has a choice, it is actively choosing to ignore its own analysis – as well as our analysis and that of the IFS – and this choice will leave students out of pocket by over £1,500.”