This week has been National Student Money Week. So there’s no better time (if there is ever a GOOD time!) to talk about student debt. *shudder*
Living costs are an issue just as much fees, if not more so. Hidden course costs, social outlay, not to mention basic needs like food, drink and accommodation; it all adds up. And the more it adds up, the more likely students are to get into debt.
Now a new report suggests that graduates may end up repaying tens of thousands more on their student loans. It’s no wonder some people are put off attending university.
While student loans constitute a special type of debt that only begins to be repaid once a graduate is earning more than £21,000, it is still seen by many as a scary debt. A debt that has little chance of going away until 30 years have passed.
Debt is a common concern
The UNITE Student Experience Survey 2014 discovered that many applicants feel in the dark regarding their finances. And while current students have a much better view of their finances, only 56% state that their financial streams are sufficient. That still leaves nearly a quarter (24%) of undergraduate respondents saying their finances are not sufficient, and another fifth uncertain of their position.
Couple this with the survey’s finding that finances are the most frequent concern for students whilst at university and it is clear that a sizeable proportion of students are not comfortable with their debt experiences.
A surprising 28% of students polled claimed not to have any debt whatsoever. Does the high proportion suggest that not all debt is necessarily considered a debt? For instance, undergraduates are far more likely to use bank overdrafts than applicants assume will be the case (28% of students, compared with 11% of applicants). Given the percentage of respondents claiming not to have been in any debt whatsoever, it could be that they do not even see an overdraft as a debt in the first place.
Fear doesn’t always lead to confrontation
So where does that leave perceptions of debt? Although tuition fees have been the focus of much national media coverage, it is unlikely that students see fees as an area where savings can be made.
Because while tuition fees are variable, up to £9,000, institutions tend to charge close to the maximum anyway. Students do not see enough difference between universities to influence their choices. One study also suggests that bursaries and other financial incentives are rarely investigated until much later in the process, if at all.
This suggests that many applicants have background fears about debt, but do not confront them. This may be due to a lack of time, or a failure to see the importance of such a worry. One way or another, financial concerns make an impact on behaviour that is sometimes indirect and unconscious.
Money and debt are, therefore, motivators that can work in negative ways. But attitudes and perceptions are difficult to work out without detailed, lengthy, costly research.
HEFCE analyses POLAR3 codes, which refer to postcode areas where people are more or less likely to participate in higher education. We can use these to assess educational disadvantages regarding HE, although HEFCE state that POLAR3 codes are not a reliable indication of disadvantaged areas in general. Nevertheless, it was interesting to see no notable differences from respondents to the UNITE survey regarding attitudes toward debt across the POLAR3 codes.
The survey did find some differences. Those in category 1 of POLAR3 (least likely to be participating in HE) were found more likely to be thinking about their job or career, as well as thinking about their family. Those in category 5 (most likely to participate) were more likely to live in university halls than categories 1 and 2.
Despite these findings, group 1 respondents were less likely to state that their intention to live at home was driven by it being more affordable. This is backed up by research that found that fear of debt was not a reliable predictor of staying at home for university to save money. What we cannot tell behind this is whether indirect and unconscious attitudes played a hidden part in the process.
The same research, by Callender and Jackson, also stated that low-income students were more likely to see the cost of their university experience as a debt and not an investment.
This difference between investment and debt can make an impact on student decisions. A 2010 Policy Exchange report stated that it is difficult for students to make rational decisions surrounding university when debts are involved. The report said, “At present such data is worryingly thin, and would-be students are left largely in the dark about many questions that they consider to be important”.
Information alone is not enough
Fast forward to 2015 again and policy has developed that centres on providing more information to prospective students through as they form the ‘heart of the system’. From Key Information Sets to improved support services once on campus, one thing students don’t seem to be lacking in is information.
But does all this upfront information make much difference to perceptions of debt? Do applicants feel reassured by promises of good value, good resources, and good job prospects?
Callender argues that information alone is not enough to improve the student experience. She also says that the game has changed, calling the 2012/13 reforms ‘more extreme’. For those in less advantaged positions, Callender suggests that the new system is more likely to reduce their chances of entering higher education and that HE could become more elitist rather than inclusive.
It’s clear that certain perceptions of debt can lead to decisions that are not always in the best interests of the individual. What is less clear is understanding who is most at risk and how they reached that perception of debt. We may find that the same concerns result in vastly different actions. Some people will not go to university at all, while others attend but tread a careful path. Others may ignore their situation altogether until it is too late.
We should stop and think carefully about this uncertainty. It is easy to shrug off when application figures to university are still healthy despite £9k fees. But that is not the whole picture. A worrying number of students will experience university in such a way that is potentially detrimental to their participation in HE and to their future beyond university.
Debt isn’t going away, so perceptions make a difference. For those 44% of students from the Unite Student Survey with uncertain or insufficient finances, it is vital to ensure that they not only receive advice and guidance where necessary, but also gain support to improve their personal perceptions of debt.
Nobody enjoys being in debt so it is crucial that students understand different types of debt and shape their perceptions of them accordingly. Only then can students respond in a way that gives them the best chance of dealing with their situation positively.
This article arose from a data hackathon, run by Unite Students and NUS Services in partnership with Wonkhe. The dataset is drawn from the Students Matter survey conducted Dec 2013-Jan 2014 by NUS Services and published in May 2014 by Unite Students.