Cost of living for students swells by 9% in a year, research finds

Millions of students face a rise in living costs far in excess of the slight increase in support from maintenance loans when the new academic year begins.

This follows a 9% annual increase in the prices of popular student basics* over the year to June 2022, according to new research by interactive investor, the UK’s second largest DIY investment platform.

For students living in private rented accommodation, the overall rate of inflation is 12% over the period (based on private rental figures from Zoopla).

Soaring energy bills were the biggest inflation driver for students, as for everyone, up 70% over the period, ahead of the cost of running a car (up 21%).

The cost of going out also surged, with the cost of going to the cinema, theatre/concerts, attending a sporting event, and dining at restaurants and cafés up 17%, 10%, and 7% respectively. Takeaways also got pricier (up 10%).

The cost of food jumped by 8% and train prices by 5%. However, books, a student staple, saw a more modest uptick of 3%.

Meanwhile, student maintenance loans have failed to keep up with rising costs.

The student maintenance loan for English students has risen by just 2.3% from 2021-2022 to 2022-2023 (£9,488 to £9,706 on the maximum loan for English students outside London), compared with the ‘student’ inflation rate of 8.9%.

Popular student basics

Commenting, Alice Guy, Personal Finance Expert, interactive investor, says: “Many students will be choosing between heat and food this winter as maintenance loans fail to keep up with inflation. Rent costs are also expected to further rise this winter.

“The inflation rate for students who are renting privately is higher (12%) because it’s based on the latest private rental figures from Zoopla, rather than historic NUS rental figures. Those going through clearing will be scrabbling around to find a house and likely paying through the nose, so the latest private rental figures are much more relevant than the overall student rent.

“Student households are likely to find it tougher than most as they have limited disposable income and spend a large proportion of their budget on essentials with little wriggle room.

“Students who have the choice might want to opt for student halls or other accommodation where the cost of bills is included so it’s easier to keep track of their budget. Other possible tips include swapping foods for cheaper alternatives and cooking from scratch where possible. Also ditching the car in favour of train or bus transport.

“It’s too late for current students, but those applying for university should weigh up the cost-of-living when they’re looking at universities as well as their courses and the university location. The average rent in some cities, like Sheffield and Nottingham, is half as much as the most expensive university towns like London and Edinburgh.

“One ray of sunshine in the economic gloom is that the job market is going crazy, and students may find it easier to find evening or holiday jobs.”

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “For many students, hopes of living their ‘best life’ have been shattered by the need to maintain financial buoyancy amid rising prices. The 2.3% increase in maximum student grants and loans for living costs simply isn’t going to cut it when inflation is expected to hit double digits this year and remain high for some time.

“The worry is the sheer scale of inflation will be a rude awakening for new students, and with the Bank of Mum and Dad also facing its own cost-of-living challenges, it can’t be relied on to offer financial support. No student should have to worry unduly about their financial situation while they are focusing on their studies, but the reality is a large number will need to work part time to support themselves.

“The extent of the cost-of-living squeeze varies by living arrangement. Those who have successfully secured a room in purpose-built student accommodation that offers rent inclusive of utility bills needn’t worry about the rising of the energy prices cap in future which is set to lead to an eyewatering rise in household energy bills. It is unlikely they will raise rents in the middle of the semester to weather heightened costs.

“However, students who live in a shared house are likely to impacted more. Four people living together, all with different attitudes towards energy usage in relation to bills, could be a recipe for rows. And with each having a vast array of electronics ranging from a mobile phone, laptop, TV and video games console, together with shared amenities, it will become quite expensive. Some house-share arrangements include utility bills and others don’t, so it important for students to check your tenancy agreement. Students, mature students or otherwise, with their own homes are likely to be impacted most.

“The rising costs are also a concern for those who are about to graduate. Graduates following the familiar pattern of leaving student accommodation to a form of private residence will have a host of costs to cover, including rent, rising food, and energy bills. As such, moving back to the family home is becoming more of a valid option for many graduates.”