Student loans are not big enough

Some student rents alone are higher than the amount they receive, meaning some simply cannot afford to go to university.

While the issue of tuition fees is often raised, in practical financial terms the biggest type of complaints the site has received from students and parents is they can't afford to live (see the Should I Repay My Student Loan?, Student Checklist and Student Loans Mythbusting guides for help).

As this information spreads to younger siblings and becomes more common knowledge it is likely to become a substantial barrier to university application.

The maximum 'living away from home' loan available to those going off to university this year is £5,500 (£7,675 in London) which will often only just cover rents in some university halls of residence, leaving nothing left for essentials such as food and travel.

Even those with part-time jobs, help from parents, Government grants and maximum loans are struggling. The average cost of a basic room in halls of residence is now £3,980 a year.

This leaves the average student with less than £30 a week for transport, food, equipment, socialising and more – while in London they may have even less.

Here are some examples of halls of residents costs:

• Southside Hall, Imperial College London charges £250/week (£10,000 for the academic year)

• Lakeside Hall, University of Warwick costs £125/week (£6,375 for the academic year)

• Richmond Park Hall, Manchester University costs £122/week (£6,320 for the academic year)

The living loan is available on top of the loan to cover tuition fees. Full-time students can take out a loan to pay for their living costs, but a third of it is means-tested based on parental income (or independent student income) –  the more they earn, the less they'll get. Those from households with income under £41,600 get some of the loan replaced by a non-repayable grant – the lower their income the bigger this proportion is.

My thoughts in a nutshell

While headlines usually shriek about huge student debts, the practical problem faced by a growing number of students is that the loan isn't big enough. While at university, tuition fees aren't an issue – you only repay them after you leave and are earning above £21,000 and then repayments are in proportion to your income. 

However, as the Government has chosen to operate via a loans system, it must ensure those loans are adequate. If students can't afford to eat, the system isn't fit for purpose. So while it's possible to say that no student needs to pay upfront to go to university, for some, especially those without parents with income to financially back them up, studying is becoming less feasible as costs rise but their student income doesn't. It's time the Government reviewed the maximum amount available. The reason I suspect this will be a tough call is that already it's unlikely many students will repay their loans in full by the time it wipes after thirty years. So increasing the loan won't actually mean they repay any more, but will cost the Government more, yet this is the system it chose to operate – and it has to make it work.

Ten Key Facts about student finance in England

1. You don't need the cash to go to university. Fees are automatically paid by a Student Loans Company loan for first-time UK undergraduates. There are loans for living costs too.

2. Fees are typically £9,000. The maximum £9,000 tuition fees is now commonplace on many courses. These fees and this loan system only impacts those who started university in 2012 or after.

3. You only repay if earning over £21,000. Full-time students' repayments start the April after graduation at a rate of 9% of everything over £21,000. If earning under that (even if having earned higher before), they repay nothing.

4. The loans are wiped after 30 years. If the loan hasn't been repaid within 30 years, the borrowing is wiped. Those who never earn over the threshold will never repay.

5. There are no debt collectors. Repayments are collected via the payroll from employers, just like tax. This means there are no debt collectors chasing repayments.

6. Many will NEVER pay it all back. Many starting even on £25,000 salaries won't repay all owed within the 30 years, meaning you repay for much of your working life, and won't need to repay all that's owed.

7. Real interest is charged but not necessarily paid. Interest is added at inflation + 3% while you're a student and between inflation and inflation + 3% after graduation depending on earnings. Yet only those who earn enough to repay the original capital borrowed will repay any interest.

8. Monthly repayments are the same, regardless of fees. The course fee size doesn't impact monthly payments as they're set at 9% of earnings above £21,000.

9. Many won't pay any more in total on £6,000 courses than £9,000. As many students, even those starting on salaries as high as £30,000, may not repay their combined fees and living loan at the £6,000 fee level before it's wiped after 30 years, there is no increased cost to them of taking a £9,000 fee course. Do you own calculations at www.studentfinancecalc.com.

10. It's financially a no-win, no fee system. In a nutshell, those who gain financially from university will have to repay, those who don't need pay back little or nothing.