Opportunity costs: The differential impact of cost-of-living pressures on students

As the OfS consults on reforms to the regulation of equality of opportunity in higher education I have attended a great many sector-wide events, meeting with numerous representatives from across the higher education sector. So often, conversations have turned to concerns about increasing cost-of-living pressures for students.

As Director for Fair Access and Participation, my focus is on ensuring greater equality of opportunity in higher education. The increase in cost of living is a nationwide issue, and students are not immune to its effects. Yet students are likely to be affected in specific ways, and face different issues, to the rest of the population. Higher living costs may, for example, prevent them from staying and succeeding in higher education.

There is particular concern that those student groups already facing the greatest risks to equality of opportunity are experiencing greater levels of hardship.

A key element of our proposed new approach to access and participation involves identifying sector-wide risks to equality of opportunity (more on this below) and shaping evidence-led interventions to mitigate those risks. The risk that cost-of-living increases presents for student from disadvantaged backgrounds is a clear risk to equality of opportunity. This makes it the OfS’s business to understand more about the impact of these increases.

The scale of the issue

A survey of 4,200 students by the Office for National Statistics found that, last autumn, 91 per cent of higher education students were ‘somewhat’ or ‘very’ concerned about the rising cost of living. While this was similar to the population as a whole, students were exhibiting lower levels of average life satisfaction than the general population.

More than three-quarters (77 per cent) of survey participants were concerned that the rising cost of living may affect how well they do in their studies. Nearly one in five said they had considered pausing their course and resuming it next year. Thirty-four per cent of respondents reported that they are less likely to consider further study. However, the proportion of students actively planning to take these actions or make other changes to their study arrangements was substantially lower.  

A survey of 4,500 students by the National Union of Students published in November 2022 found that more than a quarter of respondents were left with less than £50 a month after covering rent and bills. It highlighted the impact of financial worries on students’ mental health. A MillionPlus policy briefing (October 2022) warned that while cost-of-living worries are affecting students from all backgrounds, those hardest hit are likely to be from groups underrepresented in higher education.

Taking student and sector soundings

The OfS is working with students and the sector to develop our understanding of the issues. In a series of roundtables we are bringing together a range of voices to look at key cost-of-living themes, including:

• general impacts on students
• differential impacts on particular student groups
• provider responses to support students.

Early indications are that the sector is indeed seeing differential impacts. Our discussions with representative bodies and mission groups suggested that negatively impacted student groups include those with caring responsibilities and those on courses with high proportions of placement activity, particularly in the NHS.

There is also concern about students outside the normal measures of disadvantage. These have been called the ‘squeezed middle’ or the ‘just about managing’. One of our new key performance measures (KPM 5) identifies a group of students we term ‘economically precarious’. By this, we mean those whose family income was above the threshold of free school meal eligibility in school – the most frequently used measure of childhood disadvantage – and so receive few benefits or other support. The families of these students were always likely to find it harder to support them while they were in higher education, and even more so now. These and other groups may be at greater risk than the rest of the student population. This presents a possible risk to equality of participation.

Universities and colleges are assisting their students in a variety of ways. A number have extended their financial support programmes to help ease cost-of-living pressures – and in the coming weeks the OfS will be distributing to universities and colleges the additional £15 million in hardship funding recently announced by the Department for Education for this financial year (which adds to the £261 million already made available for hardship funds).

Other examples of activity undertaken by providers include:

• amending lecture and seminar timetables to block sessions on particular days to reduce transport costs
• organising warm areas that students with caring responsibilities can bring their dependants along to
• reducing the cost of meals available on campus, where the provider has control of this
• increasing subsidies for campus social events.

These and other ‘emergency responses’ provide a basis for emerging practice in the face of an issue few providers had prepared for, and arising so soon after the pandemic. While I am clear that evaluation and an evidence-led approach should be at the heart of access and participation activity, I applaud the pace and determination universities and colleges have shown in developing innovative solutions to support their students in these difficult circumstances.

In our discussions with the OfS student panel, members highlighted the ways in which cost-of-living rises are impacting students’ ability to have a fulfilling experience of higher education. For example, they emphasised the difficulties commuter students are facing (and have faced for some time) due to spiralling petrol costs. They also pointed to the work universities, colleges and students’ unions are doing to help students.

With the student panel, we have also commissioned a poll to gather the views of students from across the sector. Again, a key aim here is to better understand differential impacts ‘on the ground’: how are cost-of-living pressures affecting particular groups of students in their day-to-day life?

Next steps

We will be publishing an Insight brief in the next couple of months summarising our cost-of-living polling and roundtable discussions. By highlighting practical approaches taken within the sector, we hope it will be a useful contribution to the growing body of evidence on this subject.

This evidence will also feed into our work on risks to equality of opportunity. Later this year, the OfS will be publishing an equality of opportunity risk register. The register, which is an important part of our access and participation reforms, will identify key sector-level risks to equality of opportunity in higher education and highlight student groups most affected by each risk. There’s a good chance cost of living will be on the register.

We will also be publishing updated guidance for providers on preparing their access and participation plans. In the meantime, in line with the existing guidance I would encourage providers to continue to engage with their students to ensure their voice on this, as on other issues, is heard. Listening to, partnering with and understanding the views of underrepresented students can lead to improved strategies and activities that support these students to succeed.