Rampant inflation takes idea of ‘cash-strapped students’ to new level

interactive investor comments on ONS data on the the cost of living for students at universities.

The Office for National Statistics has today published a study exploring the impact of the cost of living on students at universities in England.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Rampant inflation has taken the notion of cash-strapped students to a new level. For many students, the painful rise in the cost of living is an unwelcome distraction from their education and hopes of living their ‘best life’ at university have been compromised further by galloping price rises.

“The worry is the sheer scale of inflation will be a rude awakening for students - many of whom are managing their own finances for the first time. The 2.3% increase in maximum student grants and loans for living costs isn’t going to cut it when inflation has hit double digits and is expected to remain high for some time. With the Bank of Mum and Dad also facing its own cost-of-living challenges, it can’t be relied on to offer financial support.

“The fact that one in four students had taken on new debt in response to the rising cost of living, including those who borrowed more or used more credit than usual, is concerning. It could be a slippery slope into serious debt before establishing a financial footing for many students.

“No student should have to worry unduly about their financial situation while they are focusing on their studies, but the reality is a large number will need to work even harder to support themselves.

“The extent of the cost-of-living squeeze varies by living arrangement. Students who live in a shared house are likely to impacted more. Four people living together, all with different attitudes towards energy usage in relation to bills, could be a recipe for rows. And with each having a vast array of electronics ranging from a mobile phone and a laptop, to a TV and video games console, together with shared amenities, it will become quite expensive. Some house-share arrangements include utility bills and others don’t, so it important for students to check tenancy agreement. Students, mature or otherwise, with their own homes are likely to be impacted most.

“Rising prices are also a concern for those who are about to graduate. Graduates following the familiar pattern of leaving student accommodation to a form of private residence will have a host of costs to cover, including rent, rising food, and energy bills. As such, moving back to the family home is becoming more of a valid option for many graduates.”

Saving tips for students

Myron Jobson outlines cost-cutting tips for new and existing students

Budget

Budgeting is integral when it comes to keeping your financial house in order. It allows you to plan how much you will spend or save each month as well as track spending habits.

It’s worth keeping a spreadsheet of your own spending habits. There is a plethora of budgeting templates available for free online as well as apps to help you on your way.

The rising cost of living means we are saving less to maintain current levels of spending, so be prepared to make tweaks to your budget as inflation continues to rise.

Once you have a better idea on how you spend your money, you can explore ways to help you live within your means.

Look out for exclusive student deals

There are loads of deals exclusively available to students, to help make their money go further. Such deals tend to be a percentage off the total price but could also include offers such as free trials or buy-one-get-one-free.

Available student discounts are not always made obvious by companies, so often students need to ask the question.

Save on food bills

Shop around for the best deals – especially for high-ticket items. Even simple things such as opting to purchase a store brand equivalent of traditional larder products can help to cut down the cost of groceries.

Consider buying items in bulk, so you are not constantly spending as prices continue to climb. It is also worth taking advantage of supermarket loyalty schemes - such as Tesco Clubcard and Nectar card – which can give you access to unlock big discounts and other exclusive rewards.

Shop around for the best deals

You won’t know whether you are paying over the odds for things unless you shop around for the best deals. For example, if you've been with a broadband provider for a while, it is likely that any introductory offers will have expired, and you might be paying more than you need to. The same goes for mobile phone contracts. Shop around to see if you can get a better deal.

Remember - financial support is available

Students struggling financially needn’t suffer in silence. Don’t be afraid to ask for support. There are advice and hardship funds are available at several universities. There are additional funds for those who need extra financial help as well as for students with children or dependent adults and students with disabilities. Students can also access cost-of-living support funds distributed by local councils to support residents struggling financially.

Investing for university education

Parents can help give their child a financial leg up when they reach adulthood which could help fund their university education by investing in a Junior ISA. Money invested in a Junior ISA is locked away until the child reaches 18, and earnings are tax-free.

As most Junior ISAs are going to be inherently very long term, because they cannot be accessed until the child is 18, there is ample time for short-term bumps in stock markets to be ironed out. History shows that even a ‘middle of the pack’ fund can generate strong returns over long period - so, you don’t need to be an expert stock picker to benefit. The average global investment trust is up 460% over 18 years to the end of July, while the average global fund grew by 369% over the same period. Past performance is not an indicative of future results.

Key findings:

• More than nine in 10 (91%) higher education students reported that their cost of living had increased compared with last year, similar to adults in Great Britain (91%).
• More than nine in 10 (91%) students were either somewhat or very worried about the rising cost of living.
• Half (50%) of students felt they had financial difficulties, with 35% saying these were minor and 15% saying they had major financial difficulties.
• One in four (25%) students had taken on new debt in response to the rising cost of living, including those who borrowed more or used more credit than usual; of these, 66% reported they did so because their student loan was not enough to support their living costs.