The perfect storm for Universities PART TWO: The COVID-19 ‘time bomb blind-spot’

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PART ONE set out the context of the mounting predicament universities are finding themselves in around the rise in student numbers coming down the line. PART TWO looks at the immediate burden of more students finding themselves in financial difficulty. Loss of income sources for many students will be compounded by families at home losing their incomes as the recession bites before Christmas. It will impact 'middle-class' families unused to the idea of poverty and add to the growing numbers of students seeking help. The government and universities may be stumbling into another storm by failing to see the extent of the problem because of a ‘blind spot’ in their understanding. TEFS has received reassurances directly from each of the UK Universities ministers, but they are putting too much faith in university administered hardship funds as their only fallback position. This brings many problems with it as the ministers reject a TEFS call for a UK wide task force on student support and an initiative to address a growing need that crosses the boundaries of all jurisdictions. 

TEFS challenged UK universities early on by using a Freedom of Information Request (FOI) to ask about how many of their students rely on part-time jobs to sustain their attendance and studies. This was reported by TEFS in The Guardian on 16th June 2020 with 'University students who work part-time need support – or they will drop out’ . TEFS has released several analyses of the burdens of student part-time working and more details on the FOI results are reported in ‘Blind spot about student finances cruelly exposed by COVID-19 crisis’ on the 5th June 2020. Responses from eighty universities around the UK highlighted an almost complete lack of knowledge about the number of hours their students diverted their study time to paid employment in term time. Yet the COVID-19 crisis had immediately led to an increased demand on their hardship funds as student income dried up in the lock down. This was only the start of the problem for students and universities and the government did react by allowing universities “to draw upon existing funding to increase hardship funds and support disadvantaged students impacted by COVID-19” to put into the hardship pot in ‘Support Package for Higher Education Providers and Students’ But this must be thought of as only a stop gap as the economic crisis deepens. 

The response of the UK governments. 

An open letter was then sent by TEFS to the Universities Ministers in each of the UK jurisdictions asking what was being planned in the light of the substantial job losses. It also called for a UK wide initiative to standardise the extent of help on offer across the UK. This was bearing in mind that many students cross the jurisdiction boundaries to attend a university. Ministers from Northern Ireland, Scotland and Wales were quick to respond. Michelle Donelan in England took longer but also responded in a similar fashion. They each acknowledged that they were aware of a growing problem but concentrated on what had been done to date and not on actively planning into the future. Different levels of immediate support had been offered at the outset. Michelle Donelan extended the access to existing student premium funding to the end of July with “Providers can use the funding, worth around £23 million per month for April, May, June and July, towards student hardship funds”.  However, the total fund for 2019/20 was already £277 million, or just over £23 million per month for “students who may need additional support to achieve successful outcomes”. These funds are intended to be spread over IT, mental health, and other support besides hardship, so there is nothing new on offer. As yet, there is no indication of increased hardship support in the pipeline for the coming academic year in Action agreed to support students into preferred universities 20th August 2020.

This is despite encouragement by Donelan to “where possible try to prioritise those from disadvantaged backgrounds for admission this year” in a letter to University Vice Chancellors on the same date. This reinforced instructions from the OfS on the 18th August that “students from disadvantaged backgrounds must not be allowed to slip through the net as admissions decisions are made”. 

Donelan also forgot to mention that the recent support offered was in the context of cuts being made in the 2019/20 year and into 2020/21, announced on 6th May 2020 by the OfS with ‘Funding for academic years 2019-20 and 2020-21 OfS board decisions and outcomes of consultation’. Cuts across the board include a 6.8% cut in the Student Premium for 2020/21. In response to harsh criticism of this move in the consultation responses, the OfS acknowledged some dissent but did not agree saying “that cuts to funding, and in particular to student premium funding, would have an adverse impact on providers’ ability to meet the commitments in their access and participation plans. We do not accept this”. 

It is surely the case that, in England a least, Donelan has some way to go to climb out of this hole. The adage ‘when in a hole, stop digging’ may apply. 

In contrast, Scottish Minister, John Swinney, recognised there was a need for extra cash and added that “the Scottish Funding Council made £2 million available to support FE students at college” in addition to the additional targeted support of ‘Extra hardship payments for students’ that comes to “a £5 million package of emergency financial support”. Northern Ireland has also started to ramp up the hardship funds for its two universities in June with ‘ £5.6million available to alleviate student hardship with additional £1.4million announced’. In Wales, Kirsty Williams noted that  “We are the only country in Europe that offers equivalent living costs support, in grants and loans, to full time undergraduates, part time undergraduates and postgraduates” 

In a hint at wider problems to come she acknowledged that “The Welsh Government has stressed that the scale of financial support that may be required is beyond devolved administration budgets”. This means a wider support strategy is needed for a realistic response. 

The question of whether the government response is enough might consider how much is contributed by families and part-time jobs. Last year TEFS, 19th November 2019, in ‘The cost of equalising the HE experience’ made some estimates.  Using the current £9.30 per hour real living wage as a guide, the total cost of the 'excess employment' of over 10 hours per week financing working students came to a staggering £1.18 billion total per year. It might be fair to also deduce that families of students who do not work in term-time were subsidising their children to the tune of a total of around £2.3 billion per year. 

It is therefore a deeper problem than currently planned for. 

Joined up thinking and a UK wide task force on student support. 

In the open letter, I also called for more joined up action across the UK and that a “task force should be coordinated across the while of the UK to advise each jurisdiction of the best practices widely around”. 

Although the Wales response acknowledged the need for action “beyond devolved administration budgets”, Scotland’s University Minister, John Swinney rejected this idea on the grounds that there was already ongoing UK wide cooperation and noted that “I am engaging with my counterparts across the rest of the UK at Ministerial level on all student related issues”. This is encouraging and the idea of cooperation across the UK was endorsed by his counterpart in Wales, Kirsty Williams with “I will continue to work with my counterparts in the devolved UK governments as we continue to respond to the challenges that lie ahead”. Similarly, in Northern Ireland, Diane Dodds reassured us that “my Department also maintains close contact with their counterparts in the other UK regions on all student support related issues”. However, there was no indication of such cooperation in the response from Michelle Donelan and this is of greater concern. 

I also expressed my concern that, if student numbers accepting places hold up this year, “Even students who make their final choices this week will be having second thoughts. Worse still, they may proceed more in hope than expectation and then find they must drop out later”.  It now appears the latter scenario will be acted out in the coming months as more students than anticipated emerge from the A-Level and Highers debacle. 

It is worrying that, at such a late stage, very little has entered the government planning pipeline to support students into 2020/21. The situation is precarious and likely to get worse not better as the economic downturn progresses fast. All of this is in the context of existing pressures on returning students as well as new students starting this year. 

The role of student income in financing their university studies. 

The shortfall in student funding will become worse as the year progresses and unemployment bites deeper. Numerous surveys have indicated that the proportion of students who rely on income from part-time jobs has been increasing year on year. A further increase was observed by the Advance HE/ Higher Education Policy Institute (HEPI) in its 'Student Academic Experience Survey 2020'. TEFS has highlighted the widespread effects of students diverting time away for their studies and into part-time jobs. The extent of student employment across the economy is greater than most universities realise (see TEFS 16th June 2020 ‘University student part-time working is a dangerous blind spot’). 

They are working in the dark about the extent of this in their own institutions and they may well have underestimated the growing need in communications with the government. Since March, a catastrophic loss of income has exerted massive pressure on new and returning students and this will continue into the coming academic year. 

The impact on individual students.

The negative impact of financial worries was illustrated in the ‘Save the Student Survey of 2019’ that polled 3,385 students. It showed 78% of students were “worried about making ends meet”. This was not a good baseline position from which to enter a COVID crisis lockdown. A further ‘’COVID-19 UK student survey – Results’ in May polled 2,185 university students and confirmed that studies and money topped the list of concerns despite the risk of Coronavirus infection and transmission. It also show that overdrafts and family are the main source of help in the first instance before seeking hardship funds. In a sinister twist, those resorting to so called ‘adult work’ had risen from 4% to 7% since the 2019 survey (see also TEFS 28th December 2018 ‘Mind the Gap: University students under increasing financial pressure’). The situation was already deteriorating before hardship funds were able to kick in. 

Last year Save the Student provided one of the best guides to addressing financial problems with ’What to do if you run out of money at uni’. Option seven on the list is ‘Consider taking time out of uni’. It would seem strange advice, but it may be the wisest option as it alleviates many issues from the outset. If family circumstances have changed for the worse, then a time out would allow more time to readjust to the circumstances. They say that “Voluntary or authorised interruption of studies allows students to take time away from their studies without having to drop out of uni completely. This would give you the breathing space to get a job and sort out your finances.” 

In 2020, this would be a catastrophe if it became widespread and the UK governments must surely try to avoid this outcome. 

How hard is it to get hardship funding? 

The process of access to hardship funds explains why most students turn to overdrafts and family when in difficulty. The hurdles faced when approaching hardship managers are daunting and, frankly, sapping and time consuming. In the middle of coping with studies, this can seem too much. The result is that the save the student COVID survey found that 48% of students found it difficult to get help. 

The government changed its position earlier in the summer and its ‘Access to Learning Fund’ is now called ‘University and college hardship funds'. At the time of writing, most university online advice has not caught up with this change. However, the advice is still the same “Contact your university or college to find out if you’re eligible for extra money”. 

Although the administration is different, there’s a similar process for students from Scotland, Wales, or Northern Ireland. The complication across the board is one of where the student’s maintenance funding originally comes from. Advice from universities is that all other avenues of funding must be exhausted before a hardship payment kicks in. For example, a student from England at a Scotland University is advised to “contact your home funding bodies to discuss whether there is any additional funding support available to you, while studying at a Scottish university or college”. This is because a maintenance loan is provided by the "part of the UK you normally live in, not where you will be studying". The family contribution is also expected to be paid first and, if that dries up, an application made for the adjustment to changed circumstances for a maintenance grant or loan. This can take too much time to fend off the 'wolves of debt'.

This also  illustrates how the whole system is predicated on families taking up the shortfall in most cases. But this is inherently problematical for many families. For example, a student maintenance loan in England is reduced with rising family income from a maximum of £9,203 pa for those living away from home outside London. If the family income in the same tax year is over £25,000, the maximum amount drops off on a sliding scale to £4,289 pa. Of course, none of this covers the monthly living expenses over the summer months. With most families of university students earning well over £25,000 pa, the mean student maintenance loan is approximately £6,480 or £540 per month. But actual living costs came to a total of £807 per month in 2019 (‘Student Money Survey 2019’). Of particular concern is the rising cost of decent student accommodation. In the past, I have heard from students being advised by the university to seek cheaper accommodation as a solution. The impact of a collapse in family income, that could also affect several children, is likely to be a major challenge. This will fuel an increased demand for family support and income from part-time jobs. 

Then there is timing and timeliness. If a student wishes to access a hardship fund, they must first be enrolled at the university. The maximum amount available may come to no more than £3,000 to £4,000. Then they must prove they have a pressing hardship having exhausted all other options. Universities typically ask for 2-3 months’ worth of bank statements, rental agreements, a budget, and a copy of a letter from the student finance provider indicating the amount of student finance offered. 

A sudden change in family circumstances or loss of a part-time job would need the student to first go to their student finance administration that could be in another jurisdiction. 

This issue has at least been acknowledged by the Student Loans Company who last week finally advised that it was in a position to handle changes in circumstances (News story 19th August 2020 ‘Student Loans Company ready to handle changes in circumstances and late applications’). This is welcome news but the warning is of delays. 

The spectre of unemployment affecting many more families. 

There is no doubt that unemployment will rise dramatically in the coming months as the generous government furlough scheme ends. This will impact many of the so called 'middle-class' families who think they might be unaffected. Salaried management will be let go just as zero hours staff lose their jobs. The standing assumption that their children always enter a university will be badly dented as the economic reality sinks in.  In July, the Guardian warned that the ‘UK jobless rate 'could near 15% in second coronavirus wave'. This was based on the ‘OECD ECD Employment Outlook 2020 United Kingdom’ data that has been further reinforces by the Bank of England in August with ‘Bank of England Monetary Policy Report August 2020’ (reported in Guardian 10th August 2020 Bank of England warns UK unemployment will hit 2.5m after Covid-19 slump – as it happened) and the ‘ONS report Labour market overview, UK: August 2020’. Some observers are saying that it could reach higher levels of unemployment than those endured during the Thatcher Government years up to 1983. Those who remember that disaster as new graduates themselves shudder at the thought of it happening again; albeit for a different reason. 

The potential for homelessness striking families is also looming as debt mounts across most communities. The latest Citizens Advice trends on 20th August 2020 ‘Six million fall behind on bills because of coronavirus, with carers, shielders and key workers hardest hit’ and 21 August 2020 ‘As 6 million fall behind on coronavirus bills, Citizens Advice outlines the top five bailiff and eviction need-to-knows’ paints a horrible picture that will only get worse. 

What governments must do. 

The conclusion must be that a faster reacting student hardship system must be coordinated across all UK jurisdictions. Funding bodies must all react in a similar way to changed family circumstances and accept that the ‘back filling’ of funding shortfalls by part-time jobs will cease to be a factor for many students. They must react to a loss of family income in a matter of days of it happening. Emergency payments and loans must be released as soon as a shortfall is imminent, and students advised not to rack up overdraft and credit card debt before seeking help. Returning students will be able to seek help well in advance of going back to university but new students look like they will still have to wait for arrival at the university. Asking students to advise the university if they might need help in advance would save time later. It goes without saying that universities will need to invest more on the administration of student finance support and not let their existing staff drown in the wave of requests.

The last word should go to two students cited in the Save the Student Survey from 2019. Spending time sorting out finance while trying to settle into a university will be a growing nightmare for many. 

- I have about £3.50 a day to budget for food. It really gets me down when all my friends want to do fun activities, eat out etc. I feel like I miss out on so much. 

- It's crap and really hard and I've considered dropping out many times as I'm constantly broke and tired!

Mike Larkin, retired from Queen's University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics. He has served on the Senate and Finance and planning committee of a Russell Group University.