66% of Students are Considering Dropping Out Due to Rising Cost of Living

The rising cost of living has been particularly pressing on certain financially limited groups, notably university students. Moneyzine.com reveals that 95% of university students are worried about escalating living expenses, while 7% of them have already dropped out because they can no longer afford rent or household bills.

Students are Leaving University Halls Amid Rising Costs

London is by far the most expensive city for student accommodation. Rent in the city is £113 higher than the second most expensive region, Yorkshire, and a whopping £344 higher than the least expensive region Northern Ireland.

University Rent (PCM) Across Regions in the UK

As universities increase the cost of university halls to cover the utility bills, students are increasingly turning towards private tenancy or living with their parents or legal guardians. Since 2022, students living in university halls dropped by 12%, while the proportion of students privately renting and living at home increased by 6 points each. Students save an average of £69 per month by privately renting rather than living in university halls.

And for those who choose to commute to university from home, it’s usually the cheapest option. Unsurprisingly, London has the highest proportion of students that are living at home.

Commuting times also increased slightly with the changing trends in accommodation. In 2022, it took students an average of 21 minutes to get to the campus. This has increased to 24 minutes in 2023.

More than half of the students (63%) surveyed are struggling to keep up with the rent payments to a certain extent. Of those, 18% describe it as a constant struggle, while 1 in 10 is in rent arrears. Around three in five students needed to borrow money for rent, and while most turned to their parents, 21% had to dip into their overdraft or take out a loan from the bank.

Housing Shortage Tightens its Grip

The UK is in the midst of a housing crisis as a whole: compared to the average European country, Britain has a backlog of 4.3 million homes missing from the national housing market because they were never built.

Even if the government’s current target to build 300,000 homes a year is reached, the housing deficit would take at least 50 years to fill, according to some estimates.

This has had a great effect on the students considering the increasing number of students that are turning towards private renting. One in every two said they were worried about the growing housing shortage, particularly in the cities of Durham, Glasgow, and York.

Paying Bills is Now a Constant Struggle For Many

While some bills are included in the rent, 95% of bill-paying students said that they worry about the rising costs.

The cost of household bills had already more than doubled going from 2021 to 2022. According to the latest data, students living in Canterbury receive the heftiest bills, while Coventry-based students pay the least.

University Cities with the Highest Household Bills

The rising energy cost is the culprit in soaring household bills. The average energy bill students pay increased by 37% in just one year – now it stands at £85. More than 1 in 5 (22%) of bill-paying students consider payments a constant struggle, even more than rent payments.

Students employ various methods to keep up with the household bills: more than half simply don’t put the heating on, while half spend more time in bed than usual to stay warm. This has some adverse effects on living standards, though. Students having damp issues in their houses jumped from 26% to 36% - not having the heat on as much can be a contributing factor.

Students’ Main Source of Income Can’t Keep Up With Inflation

To help households with the soaring energy costs, the government has set up the Energy Bills Support Scheme (EBSS) back in 2022 to last until March 2023. But the majority of the students couldn’t benefit from it.

Of those surveyed, 56% said that they haven’t received the £400 help from the government although they believe they should have. This is especially high for those who rent from private landlords and have some of the bills included in their rent (78%).

Students continue to be most reliant on their maintenance loans to cover their expenses. But the loan increase of 2.8% announced this year doesn’t keep pace with the inflation. Following the announcement, the Russell Group of universities warned that students can lose out as much as £1,500 a year. It is estimated that students living outside of London would get £11,501 if the loan rises in line with inflation – as it stands now, they will receive £9,978.

Students are increasingly squeezing their wallets

The substantial increase in the cost of living takes its toll on students to a great extent. 43% of the students reported that financial worries are affecting their studies. 7% dropped out because they couldn’t keep up with the rent and bill payments, while a staggering 66% are considering dropping out.

Rising costs also led to a decrease in living standards. More than half 56% reported cutting back on socialising to save money, while 45% are now spending less on holidays and other events. Perhaps the grimmest outcome was that 36% feel like they have less disposable income to spend on their health and well-being, up from 24% as found in last year’s survey.

It’s disheartening to see students are hit by pressing financial worries at a time of their lives that was supposed to be all about self-improvement, education, and gaining new experiences. The figures show that the government should immediately step up to increase its support at these testing times.

Jonathan Merry CEO of Moneyzine.com