Student Grants Scrapped: Young People Neglected in Chancellor Osborne’s Budget

On July 8th, Chancellor George Osborne announced the complexities of his Emergency Budget for 2015. Many changes were initiated within his long economic puzzle, including the introduction of a national living wage and the scrapping of student grants. From Clegg’s empty promises to freeze tuition fees to Osborne’s eradication of maintenance grants, it would seem young people have been hit hard by the economic crunch and Conservative cuts. We must ask what these new changes really mean for students and why have they drawn the short straw?

The headlines scream “student grants scrapped”, sending a message of great financial struggle ahead for young people. Readers need a breakdown of exactly what the new changes and their implementation will mean in real terms. Concerned politicians predict that young people from lower-income backgrounds will be deterred from going to university, whilst Professor Les Ebdon, director of the Office of Fair Access to Higher Education reassures that his organisation will be carefully monitoring any negative impact. With these starkly contrasting messages and the already complex finance system, it is understandable that many students are left feeling confused.


Breaking down the Budget:

Which grants are available in the current system?
Students with families who have an income of less than £42,000 are eligible for a grant under the current system. This maintenance grant does not have to be repaid and its amount is dependent on the size of the family income.

How is this going to change?
This grant is no longer available for students starting higher education from September 2016; no student will begin to receive any non-repayable support from the government.
These changes will not impact current students in higher education, who will still be eligible for maintenance grants beyond 2016.
The loan available to students is now higher, students from outside of London living away from home can claim up to £8200 a year.


The media is currently focusing upon the concern that the cutting of grants may have a negative impact on prospective students from lower-income families. NUS President Megan Dunn said these changes risk putting off many from applying to university: “Students living on beans and sketches about student poverty have become a punchline. But this isn’t a joke, it’s a national crisis.” However, it would seem the only risk here is the psychological impact such changes could have on young people considering higher education. The budget, in reality, allows students to access a larger amount of money, making university more affordable rather than less, in the short term at least.

Although the scrapping of maintenance grants will lead to students leaving university with larger debts, the likelihood is that they will never have to pay back these colossal figures. Graduates will only begin to pay back a small percentage of their loan after they earn more than £21,000 per annum and if the debt isn’t cleared within 30 years, it is wiped clean. Studies via moneysupermarket student finance calculator have shown that only graduates on starting salaries of over £30,000 per annum and pay rises which increase with inflation will ever pay back their entire debt.

In fact, Osborne’s changes could mean students have more support during their years at university. The new budget provides a higher loan than ever before (up to £8200 a year for students living away from home, outside London) for students with the lowest incomes. For students struggling to pay for their accommodation and living costs, this is cause for celebration; perhaps more welcome than the receipt of a lesser sum in the form of a grant.

“The budget, in reality, allows students to access a larger amount of money.”

As a student myself from a low income family, I have found that the scaremongering in the papers does not reflect the reality of the financial impact these changes will have. The real issue here is a lack of information. The fear that students will not be able to afford university is unwarranted. This new system should not deter prospective students.

Although controversial, it is not unfeasible to suggest that the scrapping of grants may be a deliberate ploy to make the degree a less popular choice for those with lower incomes. In a competitive culture the degree is becoming less and less valuable, it does not seem entirely unconceivable that the government could be trying to make higher education more esteemed by limiting its accessibility.

However, it is also viable that the scrapping of grants is merely an easy way to cut £1.6bn from the budget. Chancellor Osborne has stated the grants are no longer “affordable”; if this is true, this only serves to highlight the need for a change in the payment system. The government are clearly not receiving the repayments they predicted from the current system, and instead of cutting maintenance grants, it would seem logical to review the loan system. Martin Lewis insightfully suggests that student loan repayments should be viewed not as a loan debt, but as a graduate tax, for the debt does not go on credit files and is paid through the income tax system.

“The fear that students will not be able to afford university is unwarranted. This new system should not deter prospective students.”

Although many newspapers paint a black picture of how the budget will affect young people, it is arguably not the abolition of maintenance grants that will cause the biggest problems. Osborne’s national living wage will not apply to under 25s and they will not automatically be able to access housing benefit, making life more difficult financially for graduates. The Chancellor has voiced his concerns about young people leaving education and falling straight into the benefits system. His “earn or learn” policies mean that 18-21 year olds cannot receive unemployment benefits, they must either be in education or employment. However, this utterly fails to address the difficulties young people face finding employment.

The most important question is why students have been dismissed by this year’s budget. The most obvious answer is that the Conservative government has decided to strategise by appealing to those more likely to vote, appeasing pensioners and neglecting the youth population. Has David Cameron concluded that young voters are too disenchanted to turn out to their polling stations? If he has, he has made an unwise calculation. According to the British Election Study, almost 60 per cent of people ages 18-24 voted this May. In comparison with the total population 66 per cent turn out, this figure is unusually high.

The more informed students become about these negative changes, the more likely they will be to use their vote against the current government. Ironically, the present dismissal of the needs of young people could be the catalyst that causes a new height of political engagement. The Conservatives should rethink their disregard for young people in future budgets if they want to stand a chance of winning their votes come the next election.

Beth Webb-Strong

Image:38 Degrees via Flickr

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One Comment
  • Lyndsey
    31 August 2015 at 15:02
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    Really liked this article – would like to see more young adults and particularly students engaging in politics and voting with their feet once they understand what is actually happening and it’s real consequences for them. It seems to me that it’s very hard for young students to grasp what it will be like to be paying off a debt indefinitely. Calling it a tax may be more accurate, but again, how easy is it to grasp the long term impact of an on-going additional tax do early in their financial lives? Seems to me that the baby boomers have much to be thankful and hopefully can come to the aid of this new generation of workers who will not have the advantages of free university educations.

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