In March last year, Kerys Henry was taking a break from her studies on a stint abroad in Denmark.
The English literature student at the University of Manchester had saved money from three part-time jobs alongside her studies, and thought she was in a relatively secure financial position.
Then the pandemic began, and travel restrictions trapped Henry in Copenhagen. Her father, who works as a bathroom fitter for elderly people, lost work. When she eventually returned to Manchester, her finances drained, the lifeguarding and fundraising jobs that had kept her afloat had evaporated.
“I was so stressed. I was just constantly in my overdraft,” says Henry, who graduated with a 2:1 this year. “When you’re a working-class student you’re managing a whole raft of things . . . I realised a lot of my friends don’t know how much their parents earn. I know that specific amount, because I have to.”
As Covid shut down the economy last year students were among those to endure a significant financial hit.
Despite lectures moving online and most undergraduates being banned from university accommodation and facilities, they continued to pay thousands of pounds, mostly through loan financing, in tuition fees and rent.
Job losses hit part-time work, and without access to benefits many found themselves struggling. Government help amounted to less than £45 per student. According to the National Union of Students, 80 per cent are worried about money.
The pandemic has left a bitter financial legacy for the graduating classes of 2020 and 2021. Students stuck with debt are emerging into an economy of low earnings, growing living costs and out-of-reach housing.
Kathleen Henehan, an economist at the Resolution Foundation, says the pandemic could leave these graduates with financial scars and increase the divide between those from wealthier homes and their poorer peers.
On top of the short-term impact, longer term structural problems including pay stagnation and barriers to house purchase will set back current students into their old age. “I would say the picture looks really grim,” says Henehan.
Students are calling for refunds on fees and rent and government financial support. What politicians deliver will shape both the prosperity and prospects of young people, but also their belief in a system that has so far seemed indifferent to their needs.
But with its focus on Covid and the economic recovery, the government has other priorities. Education leaders are considering proposals to rebalance learning from universities to vocational training and reduce spending. Far from easing the terms on government student loans, officials are considering increasing the long-term burden.
FT Money talks to students across the UK about their current problems and their fears for the future.
The pandemic has highlighted how dependent students are on part-time work, even in normal times. Of the 62 per cent who told the NUS they held some sort of job alongside their courses, 87 per cent said they had to make adjustments to employment since the start of the pandemic.
Nelly Kibirige, who was in her second term as student union president at London South Bank University as the pandemic began last March, says students, particularly those with zero-hour or precarious jobs, found themselves with “no other means of survival”.
At South Bank, an inner-city university where 35 per cent of students work more than 35 hours a week, “students had financial problems before the pandemic, during it and after it,” says Kibirige, who lives in Southend-on-Sea.
Turn2Us, a charity that provides small cash grants for people in financial crisis, believes students have contributed to increased demand for its services.
In the year before the pandemic, it gave £95,761 of grants to people under 24, 3.3 per cent of its total grants. The following year, that had risen to £256,542, equivalent to more than 6 per cent.
Liam Evans, external affairs manager for the charity, says: “The biggest issue by and large as opposed to any other age group is that [students are] not entitled to any benefits. There are very niche circumstances [in which] students can claim financial support from the government.”
Some students interviewed by the FT saved money during the pandemic. The closure of bars and clubs and moving back with parents meant lower spending, particularly for those who received a rent refund for accommodation they could not return to during a lockdown.
Benefits, however, were not evenly shared, and the majority of students who received refunds lived in university-owned halls. Those in corporate halls received only a partial rebate.
After visiting her parents in the Christmas period, Beth, a third year forensic science student at Bournemouth University who asked for her full name not to be printed, was unable to return to her accommodation for months. Spending £150 a week on a room she could not use cost her £1,300 she did not have.
Her father’s income also dropped by 13.9 per cent, enough to cut the support she received from her parents but not to meet the 15 per cent threshold required to secure additional loan provision from the Student Loans Company. By March, she was angry enough about the situation that she moved back to Bournemouth, travelling against government advice.
“I’ve struggled a lot as a student but even more so since the beginning of the pandemic,” says Beth, who could not get a job.
“I had to severely cut my budget to the point I was eating the same three meals every day for weeks and borrowing money from friends and family, as well as eventually emptying my £2,000 overdraft. I was incredibly disappointed with [the Student Loans Company’s] lack of support.”
The Student Loan Company said in a statement it was “committed to providing students trusted, transparent, flexible and accessible student finance services”.
According to the NUS, 72 per cent of students were worried about their ability to pay rent during the pandemic, and 70 per cent were worried about their ability to pay bills.
Their precarious experience will shape students’ lives after university. Stressed by financial insecurity, Henry has been unable to devote enough time to job hunting and is working in hospitality to pay her bills after graduating. Her friend Laura, who worked on a zero-hours contract at a supermarket to support both herself and her mother, who had lost her job, also feels set back by the stress of juggling work and study. “Everything’s really uncertain,” she says.
Lucy Coxon, who graduated from the University of Bristol in 2020, was furloughed from her post as a bar manager during the pandemic and has recently returned to her job. With overtime and a side hustle teaching yoga, she works more than 50 hours a week, but high property prices mean she is likely to remain locked out of home ownership for the foreseeable future.
Although she loves her job, she worries that a change of career might be necessary. “I really enjoy working in hospitality but it feels like I’m going to be working years and years to get the money I need,” she says.
A helping hand?
During lockdown, the government distributed £85m to students in England, mostly through a hardship fund. That equates to just £43.70 per student, a sum Paul Blomfield, the Labour MP and chair of the All-Party Parliamentary Group for Students, called “insulting” compared with the £378 per student committed by the Welsh government, which is devolved on education.
The government in Westminster said the past year had been “a very difficult time for students” and said the £85m was targeted at “those students in the greatest need” and on top of an existing £256m “which universities can draw on.
As a result, universities have taken a hit to provide support. At the University of the West of England, emergency funding included £2m on tech support for 4,000 students, £2m for hardship funding for 2,300 students, and £11m for rent refunds.
Get in touch
How has the pandemic affected your student finances?
Share your experience of how you dealt with the pandemic’s financial challenges during your studies in the comment section below. We will consider the best for publication on FT.com. Please comment below this story
Vice-chancellor Steve West estimates the total financial hit at around £35m, compared with an annual turnover of £300m. The university has received financial support, but “the level of hardship funding . . . is very much lower than the true cost,” West says.
Frustrated at the lack of support, some students are taking matters into their own hands.
At arts universities in London, hundreds of international students have withheld fees as part of a campaign called Pause or Pay, while other undergraduates have withheld rent in a nationwide rent strike in university halls around the country. In a strike at the London School of Economics, students withheld £725,000 in rent.
In a less radical proposal, student unions led by LSE and University of Sheffield have modelled how a £2,700 cash refund — a one-off rebate equivalent to 30 per cent of annual fees — for all students could be made fiscally neutral if the student loan interest rate rises from 3 per cent to 6.2 per cent. Because loans are cancelled after 30 years only the highest earning graduates would be affected, making the suggestion “highly progressive”, according to former Sheffield student union president Beth Eyre.
But neither approach has cut through with the government. Ministers are focused instead on cracking down on what they deem “low value” university courses and limiting spending on universities.
A report in June by the Higher Education Policy Institute, which was received favourably by politicians, including former universities minister Jo Johnson, suggests one way to cut education spending would be to force students to pay back more of their loan — about 53 per cent of which economists estimate will not be repaid under current circumstances.
It suggests lowering the salary at which students repay the loan — at a rate of 9 per cent of their salary — from £26,575 to its pre-2012 level of £19,390, and extending the loan period from 30 to 35 years.
Nick Hillman, HEPI director and the author of the report, acknowledged the proposals would hit low- and medium-earning graduates, but said if the government was “absolutely determined to save money” on education, it could be better to lower the threshold than cut funding for future students.
For students and graduates, however, it reeks of unfairness. Eyre described it as “out of touch”, saying that her outgoings on the salary she earned as SU president would not have accommodated further tax.
Emerson Murphy, an organiser of the LSE rent strike, says it would be catastrophic. “It’s evidence that the logic of austerity is still there and it’s likely around the corner,” he said. “People shouldn’t pay taxes because they’re educated. They should pay taxes because they’re rich.”
No way back
When Michael Evans started an MA in theatre practice at the University of Exeter in September 2019, he hoped the year-long practical course would pave the way for a new direction after three decades working as an actor.
By the summer of 2020 the vision had fallen through. Among the few students still on campus, learning remotely in cramped student accommodation and unable to work or access sufficient student support, Evans was struggling to make ends meet and unsure of his future prospects.
Given the choice, he would have preferred to back out and start again. But strict financial rules mean he only had one chance of a postgraduate loan, and he feared the financial hit of loan repayments if he dropped out.
“I can’t underestimate the disappointment,” he says. “It’s my only chance, and I won’t ever have the full experience I came here to have. I felt like I was buying a brand-new car, drove off and all the wheels fall off. Then I turn around and the salesperson shrugs his shoulders.”
West, the vice-chancellor of the University of the West of England, believes the lack of control over their lives makes the financial hit more galling.
“They’re on a trajectory and most of them are not in the position to say forget it,” he says. “There’s an immediate emotional and mental health impact because of that.”
But while he had sympathy with the desire for students to pursue refunds, he fears what this, and government attempts to cut spending, could mean for the sector.
“Organisations . . . can absorb a one-off hit,” he says. “An ongoing continuation of shocks at a similar scale with any reduction in fees would be disastrous.”
A divided future
The same could be said for students’ financial outlook.
Beth, who missed out on practical lectures during her course, is struggling to find a job, and cannot afford to travel back to Bournemouth for extra sessions after her tenancy ends.
After investing in his career, Evans’ lockdown setback has damped hopes of an exciting start. “This could be the last thing I ever do in theatre, because moving forward I just need to earn a living now,” he says.
Henehan at the Resolution Foundation says: “It’s just going to divide graduates further . . . those from lower socio-economic backgrounds are going to be hit the hardest,” she says.
Eyre plans to take casual work while she plans her future. “We’re all of the expectation we’re never going to own a house or earn big money,” she says. “I feel very concerned about the world we’re graduating into.”
‘A complete lack of compassion’
International students, who pay fees up front and may take on substantial debts to fund themselves, face being dropped from their course or barred from graduating if they do not pay.
After relocating and paying high costs to study, they feel universities have mis-sold a “blended learning” experience but offered students almost fully online courses.
“The most frustrating thing was definitely the ‘blended learning’ fiasco,” says one South American student at the School of Oriental and African Studies in London. The university did “nothing” to support in-person activities, he says, while “refusing to discuss any type of financial compensation”.
Sanaz Raji, member and founder of campaign group Unis Resist Border Controls, says many who lost jobs or were forced to support families hit by the pandemic at home were met with indifference from universities.
“There was a complete lack of compassion and understanding,” she says. “They had no ability to make any money . . . and they then had the university saying, why can’t you pay your second instalment?”
Hundreds of international students have withheld all or part of their fees in protest at poor treatment. The Soas student says: “Especially for students that come from the Global South . . . and whose currencies are a lot weaker than the pound, it becomes even more difficult.”
Soas says it took measures including providing extra study space and a hardship fund for students. “Throughout the pandemic we have engaged with students frequently to ensure we are meeting their needs in these exceptional circumstances.”