Scottish Government

EXECUTIVE SUMMARY

Purpose of the study

1. This report presents findings from the second study of the income, expenditure and debt of students studying higher education ( HE) and further education ( FE) in Scotland in 2007-08. The study was commissioned by the Scottish Government and conducted by the Scottish Centre for Employment Research at the University of Strathclyde Business School in conjunction with colleagues from the Business School and Department of Economics of the University of Glasgow.

2. The aim of the study is to examine Scottish-domiciled higher and further education students' finances, particularly their income, expenditure, debt and savings, and their attitudes to the financing of study in Scotland. Where appropriate this data is then compared to the findings of the previous 2004-05 Scottish survey as well as a control group of young Scots who are not students.

Background to the Study

3. With the number of students studying higher education increasing significantly, participation in higher education in Scotland has risen to and levelled at around 50% of young people, making Scotland the lead country in the UK in terms of participation rates.

4. In Scotland there are 20 universities which award degrees and 43 further education colleges. A typical FE college curriculum spans specialised vocational education and training through to general educational programmes. These colleges also provide some higher education. In 2006-07 there were 308,085 students in higher education in Scotland, full and part-time. In 2006-07 there were also 468,155 FE college student enrolments.

5. In recent years, the financing of further and higher education study has been affected by changes and initiatives by both Scottish and UK governments. UK government has withdrawn welfare support in some cases and Scottish Executive-driven changes for Scottish-domiciled students has resulted in a distinct student financial support system within the UK. Scots students now have a graduate endowment ¹ scheme, student loans, further and higher education bursaries and hardship funds, as well as educational maintenance allowances.

6. This expansion of HE is a cornerstone of Scotland's economic and social policies as well as its lifelong learning strategy, and intends to deliver a high skills economy and tackle social exclusion and poverty. In particular, increasing the supply of graduates in the Scottish labour market is a key feature of developing a Smarter Scotland. Scotland's FE colleges too are accorded a role in the creation of a Smarter Scotland.

7. Having little money, being in debt and not having a regular income are seen as the three worst aspects of student life ². To support their study, many students take up paid work and students are now a structural feature of the labour market. There is some ambiguity about what students spend their money on and how much of this spending is attributable to the cost of study. What is clear is that many students are in debt and that for young people from less advantaged backgrounds debt and the fear of debt, can act as deterrents to study. Despite the shift to mass HE with a commitment to widening access, participation from those from less advantaged backgrounds remains stubbornly low in the UK.

Research Methodology and Methods

8. The research undertaken for the current study is broader and deeper than that of the previous Scottish survey. The current study comprises both desk-based and empirical research and this time, employs a mixed methodology in which quantitative data is complemented by qualitative data. In addition, three surveys were conducted including one of a control group of non-students.

9. The research therefore had three stages. The first stage comprised the desk-based research; the second stage centred on the quantitative data gathering and featured three surveys; the third stage involved the gathering of qualitative data through semi-structured telephone and face-to-face interviews.

10. Full details of the methodology of the research can be found in the Research Methods section in the introductory chapter to the report and also in the Technical Appendix.

Findings

11. The analysis distinguishes between full-time higher education students ( FTHE), part-time higher education students ( PTHE) (including those of the Open University) and full-time further education students ( FTFE) and is sensitive to a range of variables, factors and categories amongst these different types of students.

12. Within the analysis of FTHE students, distinctions are made between sub-degree and degree only students (data for which is also combined to give FTHE data) and PTHE students. In the analysis of FE, only full-time FE students are included.

Higher Education Students' Income

13. The table below presents students' total mean income and the main sources of that income by level of study.

14. Total income varied by student characteristics and level of study. The main highlights from the findings are:

• Student income varies little by sex but varies widely by mode of study with part-time students' incomes considerably higher than those of full-time students.
• Income also varies by age and whether the students have dependent children ⁴; mature students have almost five times the income of younger students. Younger students are also more likely to be living with parents and have lower levels of income.
• Working class FTHE students have slightly higher income than middle class ones. There is no obvious interpretation of this finding but it could be that middle class students are receiving more in non-cash benefits from family.
• While about three quarters of the sample of students in FTHE have taken out student loans, only just over 9% of part-time students had one. (It should be noted that not all part-time students are eligible for student loans and loans available have an upper limit of £500).
• The majority (around 60%) of FTHE students declared term-time earnings; 70% of part-time students did so. Students typically work in low wage industries. FTHE students work longer hours than recommended by the Cubie Report of 1999 (13 as against the recommended 10 hours).

Higher Education Students' Expenditure

15. The table below summarises the total mean expenditure and the main types of that expenditure by level of study.

16. Total expenditure varied by student characteristics and level of study. Definitions of the types of expenditure can be found in Appendix D. The main highlights from the findings are:

• There is a wide variation in expenditure within and between the main student groups.
• The biggest costs facing most students are living costs followed by housing costs.
• Child-related costs are significant for those students who have dependent children (a group which also reports higher living and housing costs, perhaps also as a result of having dependent children).
• Child-related costs are mostly incurred by PTHE students and mostly by female students.
• Those students with the lowest housing costs were also those who were least likely to take out a student loan.
• Expenditures for most students rise slightly throughout their period of study and then dip in their final year, perhaps as a result of the need to study and a reduction in time (and money) spent on leisure.
• Working class students are spending more in almost every expenditure category.

Higher Education Students' Debt and Savings

17. The table below summarises the total mean debt and the main types of that debt by level of study.

18. Students also reported their savings, although not all students had savings. The table immediately below reports total mean savings across all students.

19. The next table reports the total savings of those students who have savings.

20. Total debt and savings varied by student characteristics and level of study. The main highlights from the findings are:

• Although commercial debt is significant, debts to the Student Loan Company represents the majority of borrowing for full-time students. Part-time students rely much more heavily on commercial loans.
• Among full-time and part-time students, mature students and those with dependent children have the highest level of total debt. Full-time students from working class families tend to have higher overall levels of debt than their middle class peers.
• For full-time students, commercial debt is higher for students who are older, working class, have had no family member studying at university, have dependent children and do not live with their parents.
• For part-time students, mean commercial debt is higher for students who are female, aged over 25 years, have had no family member studying at university, have dependent children and do not live with their parents.
• Debt-free full-time students tend to be younger, middle class, living with parents, without dependent children and with a family member who have studied at university. Part-time debt-free students were more likely to be female, over 25, without dependents, not living with their parents, from working class families and having a family member who studied at university.
• Generally male students have higher savings and those students with dependent children have less savings. The level of savings by age is mixed. Amongst full-time students, savings degrease slightly with age, amongst part-timers mature students have considerably more savings. There are only small class differences amongst PT students though working class FT students have noticeably lower savings than students from middle class backgrounds. Savings differ little by living arrangement for FT students but amongst part-timers those not living with parents have considerably higher savings.

Further Education Students' Income, Expenditure, Debt and Savings

21. The table below presents the total mean income and main sources of income for FTFE students.

22. Total income varied by student characteristics. The main highlights from the findings are:

• Male students have higher income than female students.
• Younger students aged 16-20 tend to have lowest total mean income; students aged 21-24 the highest. Mature students, those aged 25 years and over, have a total mean income nearer the highest range.
• Students from middle class backgrounds have higher incomes than those from working class backgrounds. Students from a middle class background have a mean income of £4747; from a working class background £4015 (around 85% of that of middle class students) with a median of £2886 suggesting a wide dispersion of incomes.
• Students who had a family member at university have higher incomes than those students without a family member at university.
• Students with dependent children have much higher incomes - almost one third more - than those students without dependent children.
• Students who do not live with their parents have higher incomes than those students who do live with their parents; more than double in fact.

23. The table below presents total mean expenditure and main types of expenditure for FTFE students.

24. FTFE expenditure varies by student characteristics. Highlights of these findings reveal that:

• Those students with the highest mean expenditure are those with dependent children. Those students with the lowest mean expenditure are those who live with their parents. Female students have a much higher total expenditure than male students. Indeed the average female student's expenditure is more than 20% higher than that of male students.
• In terms of age, students aged 21-24 years have the highest expenditure, although mature students' expenditure is also high compared to the youngest students.
• Students from a middle class background have a larger mean expenditure than students from a working class background.
• Those students with a family member having studied at university have a higher expenditure than those students with no family member having studied at university.
• Those students with dependent children have around double the level of expenditure of those students with no dependent children.
• Those students who do not live with their parents have more than double the expenditure of those students who do live with their parents.

25. The table below presents the total mean debt and main types of debt for FTFE students.

26. Debt levels vary by student characteristics. Data for mean debt across these characteristics shows that:

• Female students have a considerably higher mean total debt than male students; more than three times higher.
• Debt increases with age. Students aged 16-20 years have lowest debt, whilst the mean total debt of mature students is more than 5 times higher.
• Although mean total debt is higher for students from middle class backgrounds, it is not markedly higher than that for students from working class backgrounds.
• Students with a family member who has studied at university have a higher mean total debt than those students who do not, although again the difference is not dramatic.
• There is a very big difference in mean total debt arising from having dependant children. Students with dependant children have a mean total debt level 3.5 times higher than students with no dependent children. (With a low response from students with dependent children, these figures should be treated with caution.)
• Similarly there is a large difference in debt levels for students with different living arrangements. Those students who do not live with parents have a mean total debt level three times higher than that of students who live with parents.

27. Students also reported their savings, although not all students had savings. The table immediately below reports total mean savings across all students.

28. As with HE students, not all FE students have savings. The table below presents the mean total savings for those students who report having savings.

29. FTFE students' savings varied by student characteristics. The main highlights from the findings of those students who do are:

• The highest savings are held by those who are male, oldest, from working class backgrounds, have a family member who has studied at university, and do not have any dependent children.

Students' Attitudes and Behaviour

30. Students' attitudes and behaviour were analysed through a series of questions in the main survey plus the data from follow-up qualitative interviews conducted with students identified as being from working class backgrounds.

31. From the main survey, the key findings showed that:

• FTHE students indicated that they would have liked more information about the cost of studying prior to starting their studies.
• Students across all of the sub-groups reported a number of difficulties, with some indicating that they had thought about leaving their course prior to completing.
• Over 80% of those students reporting that financial difficulties did affect their study-related work, reported that it caused them worry and stress during their studies. Students also reported that they often went without or cut down on a number of things due to perceived financial hardship.
• In looking forward post-study, for those students looking to go in to employment there was a generally realistic assessment of their likely earnings for their first job after graduation, though only a minority of PTHE and FTFE students thought that they would obtain a job in their chosen career; likewise only 50% of FTHE students.
• A minority of students disagreed with the view that current funding policies are fair. In particular, students indicated their support for targeted support from government towards students from low income backgrounds.

32. From the follow-up qualitative interviews, the key findings showed that:

• Overall, most of the interviewees seemed relatively satisfied with current funding arrangements. However, there was support for the view expressed in the main survey that government support should target students who were struggling financially or from less well-off families.
• There was concern about the accumulation of debt as a consequence of studying, but also some resignation about its inevitability. This concern, particularly for mature students with dependent children, tended to centre on the disjuncture between the level of funding currently available and the costs of living.
• Generally, having a student loan was perceived as normal, again inevitable and also different from other types of debt, particularly that derived from commercial sources such as banks.
• Most students had paid employment which often involves long working hours - more than recommended within the Cubie Report. As a consequence, it was perceived to have a detrimental effect on the process and outcomes of study as well as the general student experience.
• Most students hoped, and indeed expected, that the financial hardships being experienced now would be ameliorated by future benefits, particular through the acquiring of better jobs.
• Younger students appeared satisfied, even indifferent, to sourcing information about the cost of study and the availability of funding prior to going to university. Mature students were more likely to express dissatisfaction in this regard and felt disappointment in the lack of available information, an experience that was compounded, particularly for those with dependent children, by the level of debt being accumulated during study.

Comparative Analysis

33. There are two types of comparison. Firstly, comparing FTHE students' data with that from a control group of non-students; secondly, comparing the findings from the current study of FTHE and FE data with findings from the previous Scottish study of 2004-05.

34. Comparing the non-students in the control survey and the FTHE students in the main survey, the data reveals that the latter:

• Work in different industries; the students tend to be more concentrated in particular industries, non-students are spread more across all industries.
• Work less hours in paid employment, even when working part-time.
• Have lower levels of income.
• Have lower expenditure.
• Have higher levels of debt.
• Have lower levels of savings

35. Where comparisons are possible between the current and previous Scottish studies, the data shows that for FTHE students in Scotland:

• Mean total income in Scotland has decreased slightly in recent years.
• Mean total expenditure in Scotland has decreased slightly in recent years.
• Mean total debt in Scotland has stayed roughly the same in recent years.

The decrease in income reflects a slightly lower take-up of student loans and a slight rise in income from education-related grants and bursaries but mainly a large drop in informal income. It also masks a rise in income from term-time employment. In terms of expenditure, housing costs have roughly stayed the same but lower living costs are now reported. The debt comparison is methodologically difficult to make but seems to show a drop in debt resulting from study-related credit e.g. student loans and a rise in debt from commercial sources e.g. from banks.

36. Where comparisons are possible for FE students in Scotland, the data shows that:

• Mean total income in Scotland has stayed roughly the same in recent years.
• Mean total expenditure in Scotland has increased slightly in recent years.
• Mean total debt in Scotland has increased considerably in recent years.

The income figures mask some changes: informal income and income from State benefits have dropped but income from education-related grants and bursaries and from term-time employment have risen. In terms of expenditure, most costs have remained roughly the same, though child-specific costs and participation costs have risen slightly. The rise in debt is related to a large increase in debt from commercial sources e.g. banks.

37. Although there are increases and decreases for different types of income, expenditure and debt and variations by type of student - both FTHE and FE - considerable change has occurred for mature students and those students with dependent children.

38. One area of concern that emerges, therefore, from the comparisons are the rising costs during study being borne by mature students and those students with dependent children. Widening access to post-compulsory education means encouraging participation from more 'non-traditional' students of which these two types, along with those young Scots from less advantaged backgrounds, are government priorities.

Conclusion

39. The table below summarises Scottish students' finances for 2007-08.

40. It is also useful to try and examine the pattern of these finances for both FTHE and FTFE. The pattern reveals that for FTHE students:

• Male and female students have roughly the same income, expenditure and debt but males have higher savings.
• Amongst the different age groups, mature students have the highest income, expenditure and debt, and lowest savings.
• Students with dependent children have higher income, expenditure and debt, and lower savings than students with no dependent children.
• Working class students have higher income, expenditure and debt, and lower savings than middle class students.

41. For FTFE students, the patterning reveals that:

• Male students have higher income and savings; female students higher expenditure and debts.
• Amongst the different age groups, mature students have high but not the highest income and expenditure and also the highest debt and savings.
• Students with dependent children have higher income, expenditure and debt and lower savings than students with no dependent children.
• Working class students have lower income, expenditure and debt, and higher savings than middle class students.

42. Collapsing these summary findings reveals that in participating in post-compulsory study in Scotland, the financial situation of male and female students is mixed for FE students but fairly similar for HE students. In terms of class there is a disparity between the financial circumstances of working class students in HE and FE, almost a polarisation. Of salience is the financial situation of mature students and those students with dependent children. Whilst both have high income across HE and FE, their expenditure falls short of this income, resulting in the highest debt; they also have lower savings, except in FE.