Exploring student finances

• Summary
• Introduction
• How much money do students have and where does it come from?
• Comparative incomes
• Importance of working whilst studying
• References

Summary

Emma Pollard from the Institute for Employment Studies reports on the latest national Student Income and Expenditure Survey which presents data on the income, expenditure patterns and anticipated debt levels of students following higher education courses in 2004/05 - the year before the introduction of variable tuition fees. The large scale and comprehensive study shows how the levels of total student income vary for different groups of students and, more importantly, the degree to which students rely on particular sources of income to support them during their time in higher education. It also shows the increasing importance of paid work to student incomes.

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Introduction

The study of student incomes and expenditure was undertaken jointly by a research team from the National Centre for Social Research (NatCen) and the Institute for Employment Studies (IES) and was commissioned by the Department for Education and Skills (DfES) and the National Assembly for Wales (NAW) [1]. It involved face to face interviews with, and analysis of diaries of expenditure from, a random sample of over 3,700 full- and part-time higher education students across 88 higher and further education institutions in England and Wales [2] [3]. It was the first comprehensive assessment of student finances undertaken since 1998/99 and was designed to provide a robust baseline against which future changes, following the introduction of variable tuition fees and changes to student financial support, could be monitored [4].

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How much money do students have and where does it come from?

The study found that the average full-time student had an income of just over £8,000 a year (£8,333 for English-domiciled students and £8,400 for those of Welsh domicile), which was used for study and living costs. Taking account of inflation, real student incomes have risen by almost one half (46%) in the six years since the last survey in 1998/99. The average income of a part-time student was much higher at around £11,000 (£11,196 for English students and £10,400 for Welsh students) but has seen a much more modest change since the previous survey, rising by only 18%.

Students can receive income from a range of sources. These include public HE support, the main sources of which are: reduced tuition fees (fee support); Student Loans; Access to Learning Funds or Financial Contingency Funds (often known as hardship funds); and Opportunity Bursaries which have been replaced by the new Higher Education Grant. Other public financial support is available but this tends to be targeted towards small groups of students with particular needs and/or backgrounds, such as students with children, students with disabilities, or those studying particular subjects. Students can also receive income from undertaking paid work during the academic year; from social security benefits; and from their family and friends through contributions towards costs of study and living costs, gifts, or sharing income with a partner.

Make up of incomes varied dramatically between full- and part-time students, partly due to part-time students’ ineligibility for some forms of support and mostly to a much higher incidence of paid work among the part-time student population. For this group, on average, work income constituted the vast majority (77%) of their total income. The make up of full-time students’ income was spread across a greater range of sources. Public HE support (particularly in the form of Student Loans) was the most significant source of income, making up 40% of their total income, contributions from family and friends were also important, making up 25%, and earnings from paid work contributed a further 22% towards full-time students’ total income (see Table 1).

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Comparative incomes

Not only do average total incomes and the contributions of income sources vary between full- and part-time students, they also vary considerably between different groups of students. However, higher incomes should not be equated with being ‘better off’, as students with higher total incomes may have higher living and study costs (expenditure).

A multiple linear regression indicated that the student and study characteristics most strongly associated with variations in total income were factors such as age, family type, socio-economic group, ethnicity, living circumstances and study location. Focusing on full-time students of English domicile, it is interesting to investigate the different income patterns for different groups of students (see Table 2).

• Age: Mature students (those 25 or older when they started their course) had higher total incomes than their younger peers, at £10,660. These older students relied more heavily on targeted public HE support (which made up 20% of their total income) particularly in the form of subject specific bursaries such as the Training Bursary, the Secondary Shortage Subject Scheme (for those studying education), NHS bursaries and NHS student loans (for those studying subjects allied to health). They also relied more heavily on earnings from paid work and social security benefits (contributing 26% and 13% respectively towards total income). They had much lower contributions from family and friends and were considerably less likely to take out a Student Loan than younger students. For younger students, the key sources of support were Student Loans and income from family and friends (the latter contributing 33% of total income).
• Family type: Students who were lone parents had the highest total incomes of all students, at £14,647. They relied heavily on the targeted public forms of HE financial support, particularly child-related support (such as the Childcare Grant, Parents’ Learning Allowance and Lone Parents’ Grant), and also on social security benefits, which again tended to be related to childcare (such as Child Benefit and Child Tax Credit). Together these sources contributed more than half (57%) of the total income of these students. However, earnings from paid work and contributions from family and friends had little influence on the overall income for these students.
• Socio-economic background: Students from managerial and professional backgrounds had on average a marginally higher total income, but the make up of their income varied considerably to those from other socio-economic backgrounds. Students from managerial and professional backgrounds received almost one third (32%) of their income from family and friends, indeed for advantaged students parental financial support was particularly important. This contrasted strongly with students from routine and manual work backgrounds where only 13% of their income came from this source. Instead this latter group relied much more heavily on public HE support which would be expected given the government policy to encourage individuals from lower socio-economic groups to participate in higher education through (among other things) the provision of targeted financial support.
• Living circumstances: Dependent students who lived at home with their parents during term-time had a very different income profile to those who moved away to study. Those living at home had considerably lower incomes than those who lived away from their parental home, at £6,721 compared with £8,725. A key source of income for those living at home was earnings from paid work, which made up over one third (35%) of their total income. These students were much more likely to engage in paid work whilst studying than other groups of students, but conversely were considerably less likely to take out a Student Loan. Students who moved away to study relied heavily on their parents for financial support, indeed monies from family made up over a quarter of their total income (27%). This could suggest that only those who can be supported by their parents can afford to study outside of their locality.
• Ethnicity: Overall, the average total income of minority ethnic students was lower than that for white students but this could be explained by: a lower take up of Student Loans (particularly amongst Asian/Asian British students); a greater tendency to stay living with their parents while studying; and lower levels of family contribution to income associated with staying at home. Just over half of Asian/Asian British students and almost one-third of black/black British students lived at their parental home during term-time, compared with 15% of white students. Black/black British students had a higher average total income than Asian/Asian British students, explained by a much greater likelihood to engage in regular paid work (and thus achieve greater levels of earnings from work). It could also be influenced by greater levels of subject specific financial support reflecting a preference among black/black British students to follow courses allied to health.
• Choice of HE study: Medical students had among the lowest incomes at around £8,000, whereas those who studied education and subjects allied to health had much higher levels of total income (though this was not significant in the regression model). The low levels of income found for medical students were largely due to lower earnings from paid work. This group were much less likely to undertake paid work during their studies, possibly due to the structure and demands of their courses preventing them from doing so. However, they had among the highest contributions from family and friends, making up over one third (34%) of their total income.
• In-country/out-country effect: English-domiciled students studying at English institutions had a similar pattern of total income and income sources to that of Welsh-domiciled students studying at Welsh institutions. Similarly, income patterns of those studying out of their country of domicile were alike. In-country students were found to have higher total incomes on average due to higher earnings from paid work. This effect may be caused by a number of factors such as differences in the profile of students who study in-country compared to those who study away, and/or having better networks within local labour markets enabling access to paid work.

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Importance of working whilst studying

As indicated by the income profiles of different groups of students described above, the contribution of earnings from paid work can have a profound effect on student incomes. It is, therefore, useful to explore the nature and importance of working whilst studying a little further.

The study of student incomes and expenditure collected comprehensive data on the earnings students received and expected to receive from paid work during the academic year 2004/05. Paid work could cover full- and part-time jobs, regular or continuous jobs (defined as jobs the student had since the start of the academic year and expected to continue to the end of the academic year), and more casual or occasional jobs in both term-time and holiday periods (excluding the long summer vacation).

Looking across all full-time students of English domicile (whether they worked or not), the average net earnings from paid work during the 2004/05 academic year (including term-time and the Easter and Christmas vacations) was £1,821. This represented just under one-quarter, 22%, of overall student income. Income from paid work was found to have more than doubled in the period between 1998/99 and 2004/05, even after allowing for inflation. The figures for Welsh students were slightly lower, with average earnings across all full-time students at £1,457 making up almost one-fifth (17%) of total income.

Focusing on English-domiciled full-time students, over half (56%) undertook some form of paid work during the academic year, and the average earnings amongst this group who worked whilst they studied was £3,257. Some students were more likely to engage in paid work whilst studying than others and the factors most strongly associated with propensity to work were: gender, family type, ethnicity, living circumstances, parental experience of higher education, location of institution, subject and year of study. Indeed, the groups most likely to engage in paid work were:

• students living at home with their parents (74% of this group of students engaged in paid work);
• students without children (65% of ‘dinkys’/students in a couple engaged in paid work);
• those in the early years of their course (58% of first years, and 60% of those mid course);
• black/black British students (61%) and white students (57%);
• women (59%), and
• those following courses in human and social sciences (60%).

Full-time students were more likely to engage in regular or continuous work than hold less permanent jobs: 17% undertook casual work; 31% had continuous/regular jobs; and 7% did both, topping up their regular work with casual work. Looking at the regular or continuous jobs of full-time English students, the majority of working students reported that they worked different hours during holiday periods than during term-time. The average number of hours worked during term-time was 13.5 per week, and this rose to almost 27 hours per week during the Christmas and/or Easter vacations. During term-time, students in continuous work earned on average £6.10 an hour.

Students could also supplement their income by working during the long summer vacation, and students beyond their first year of study were asked if they had undertaken any paid work over the previous summer (July to September 2004). A high proportion, 86%, did so and they earned an average of £1,544 during the period.

Looking at both summer work and working during the academic year (for those asked the relevant questions), virtually all full-time English students (98%) engaged in some form of paid work during the year July 2004 to June 2005.

References

1. Finch S, Jones A, Parfrement J, Cebulla A, Connor H, Hillage J, Pollard E, Tyers C, Hunt W, Loukas G (2006) Student Income and Expenditure Survey 2004/05, DfES Research Report 725.

2. There is a further report for the Department of Education and Learning in Northern Ireland (DELNI) covering students in Northern Ireland. See Northern Ireland Student Income and Expenditure Survey 2004/05 (September 2006), Department for Employment and Learning.

3. A separate study has been undertaken in Scotland on behalf of the Scottish Executive. See: Callender C, Wilkinson D, MacKinnan K, Vergis S (2005) Higher and Further Education Students’ Income and Expenditure and Debt in Scotland 2004-2005, Scottish Executive Enterprise and Lifelong Learning Research Programme.

4. Callender C, Kemp M (2000) Changing Student Finances: Income, Expenditure and the Take-up of Student Loans Among Full- and Part-time Higher Education Students in 1998/99, Department for Education and Employment (DfEE) Research Report RR213.

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