Poorer students face loss of new grants

Owen Kennedy 30 October 2008

New grants for students from low-income backgrounds could be at risk due to a government budgeting blunder.

The Department for Innovation, Universities and Skills (DIUS) was reported in The Guardian to have a £100m hole in its £17bn budget, after miscalculating the cost of a scheme to expand its grant programme.

The expansion programme, announced last month, would have made students with household incomes of up to £25,000 eligible for the maximum grant of £2,825 per year in addition to their student loans. Those from households with incomes up to £60,000 were to receive progressively smaller grants relative to their household income. It was estimated that up to a third of all students would qualify for the full grant, with a further third eligible for a partial one.

But the number of university applications rose much faster than the DIUS had anticipated, leading to the funding gap. The number of students starting at university this year rose by 10.5 per cent, with the biggest increase coming from students from low-income backgrounds.

The Guardian also quoted anonymous sources who claimed that the scheme had never been properly funded in any case, calling the Department’s announcement of the plan “a fingers in the sky exercise”.

Other sources also claimed that the decision to expand the grants programme so ambitiously was taken too hastily. It has been suggested this was a consequence of the rushed creation of the DIUS, after the old Department for Education and Skills was split when Gordon Brown came into office.

As a result of the mistake, the DIUS is faced with a stark choice. If it cannot find the money in another section of the departmental budget, it may have to reduce the scope of the programme by cutting the number of eligible students or the amount they would receive.

Otherwise the DIUS may be forced to reduce the size of grants given to students who are already receiving them. The government’s planned increase in the number of places available in higher education may also have to be frozen.

“Increasing grant support immediately made it a much more expensive package and it seemed completely unnecessary at the time – the overriding political interest was widening participation but this did nothing for that as these people were going to university anyway,” said Bahram Bekhradnia, director of the Higher Education Policy Institute think-tank.

Charlotte Richer, CUSU Access Officer, told The Cambridge Student (TCS): “It’s absolutely ridiculous that the government failed to properly cost such a major policy change. Any government that prides itself on social mobility should be ashamed and appalled at their inability to add up.”

She added that the partial grants for students from slightly higher-income families were particularly important: “It’s essential that this money goes to students who need it. Those from middle-income families are often hit hardest. It’s vital that the money goes to them.”

The potential loss of the new grants is particularly disappointing, given that a survey recently conducted for the National Union of Students (NUS) found that 46 per cent of students who work during term time are forced to do so because their basic living costs exceed their loan.

This survey also found that, for almost half of students who work, their jobs are having a negative impact on their studies.

Aaron Porter NUS Vice-President for Higher Education said: “It is clear from this report that financial support is inadequate for many students.”

“With a recession looming and basic living costs set to rise, this situation is going to get even worse.”

Owen Kennedy