How the cost of living crisis is affecting students' money and mental health

There are over 2.5 million higher education students in the UK, studying at over 150 higher education providers. The majority of these students are aged 24 or under, and for many, university is the first time they have lived independently with responsibility for their own finances and time. The transition into higher education can often be a challenging experience. Homesickness, loneliness, academic pressures and financial difficulties are all common issues faced by students, and these can intensify at certain times during the academic year. 

However, the current cost of living crisis means that at present, many students are experiencing continuous, intense concern around their financial wellbeing, which is having knock-on negative impacts on their mental health. 

In July 2022, Student Minds commissioned a survey of 500 university students, with the aim of better understanding their experiences and concerns ahead of the 2022/23 academic year. Our findings reflected those of other organisations: the rising cost of living is causing high levels of stress and concern amongst university students, and many are worried about making ends meet.

Half (51%) of the students we surveyed said that the rising cost of living was impacting their mental health. This was the number one issue identified, above studying and exams (45%), loneliness (36%), and the Covid-19 pandemic (12%). We also found that, at the time of the survey, almost one in three students were struggling financially. We expect that since then, this number will have increased further. 

Similar findings have also been observed by other organisations. Back in February 2022, Blackbullion reported that 75% of students they surveyed were worried about finances. Of these, 57% said this has a negative impact on their mental health. Similarly, in research conducted over the summer, Save the Student found that 59% of students surveyed said their mental health suffers due to money worries. 

It is clear that adequate financial support for students is vital. In 2020/21, 1.5 million students accessed funding through the Student Loans Company, with the average maintenance loan paid to full-time, UK-domiciled students in England being £6,860. The expectation from the UK government is that students’ parents make up any short-fall, with maintenance loans being means-tested based on household income.

However, given that the cost of living crisis is being experienced across the population, it’s unsurprising that this has become increasingly difficult for parents. In April 2022, Unite Students reported that 73% of parents were ‘extremely worried’ about the rising cost of living and 36% were struggling to financially support their child(ren) at university. 

The result is many students facing significant funding gaps whilst at university. Save the Student’s 2022 Student Money Survey found that the average student’s Maintenance Loan falls short of covering their living costs by £439 every month. 

This gap has likely been compounded this year by the value of student living cost support reaching a seven year low, according to the Institute for Fiscal Studies. That is due to maintenance loan entitlements rising by just 2.3%, whilst inflation has peaked at almost 9% at the beginning of the academic year. This also means that for the first time since 2003/04, the maximum maintenance loan entitlement falls more than £1,000 short of what a 22-year-old student would earn if they worked in a job that paid the National Minimum Wage instead of studying.

It is also vital to note the unequal impacts of the rising cost of living. The student body is not homogeneous, and as such the current crisis is being felt in different ways by different students, and to different extents. Analysis by the MillionPlus group shows that age and belonging to a Black ethnic group are the two strongest predictors of being at-risk of financial hardship amongst students. Other factors identified were socioeconomic status and commuter status.

Student Minds is advocating for urgent, additional financial support for students. We are asking the government to step in to stabilise energy costs, bring maintenance loans in-line with current inflation rates, reintroduce maintenance grants and provide additional hardship funding.

We are also asking that the government ensures that any policy measures designed to provide support during the rising cost of living are developed with students in mind. You can read more on our website.