Student Finance and Wellbeing Study (SFWS) Scotland 2023-2024: main report

1. Introduction

In 2023 the Scottish Government commissioned the Scottish Centre for Social Research (ScotCen) to conduct the Student Finance and Wellbeing Study (SFWS) 2023 to 2024. The study aimed to collect high-level and up-to-date information on the financial experiences of students in further education (FE) and higher education (HE) in Scotland.

1.1. The Student Finance and Wellbeing Study, Scotland

The SFWS emulates the Student Income and Expenditure Survey (SIES) which has been undertaken at regular intervals in England and Wales since 2004/2005, with the last undertaken in 2021/22. The Scottish Government commissioned ScotCen to conduct this independent study in order to explore the financial experiences of FE and HE students in Scotland in more detail, and to address gaps in the policy and research evidence and literature.

The Scottish SFWS was a mixed-methods study consisting of a survey and follow-up qualitative research with full- and part-time students in colleges and universities across Scotland. While the England and Wales SIES focused on students in HE, the SFWS captures a range of student experiences and included students enrolled on: FE, Higher National Certificates (HNC), Higher National Diplomas (HND), undergraduate degrees, and postgraduate courses. The study provides an opportunity to fill a long-standing evidence gap since the last Student Income and Expenditure Survey in Scotland in 2007-2008.

1.2. Policy context and background

This section provides a brief summary of the policy context and background to student funding in Scotland.

1.2.1. Scottish post-school education

Scottish undergraduate degrees are generally four years in length rather than typically three years in the rest of the UK, and are mainly studied at university. Scottish students are able to progress on to a postgraduate degree such as a Postgraduate Diploma or Masters following on from a successful completion of an undergraduate degree.

Scottish students can study both FE and HE qualifications at college. FE courses are typically those below SVQ level 4 or SCQF level 7. However, some school level qualifications at college, such as Advanced Highers which are SCQF level 7, are classified as FE. HE courses at college are those that are typically at SCQF level 7 or above, such as HNCs or HNDs. These may also be classed as other undergraduate qualifications.

In 2022-23, 26% of full-time equivalents (FTE) enrolled in Scottish colleges were studying an HE level course, with most enrolled on HNCs or HNDs. Upon completion of an HNC/HND, students may have the option to 'articulate' to the second or third year of university degree programmes. This provides an alternative route into degree level study.

Widening access to HE has been a key policy focus in Scotland in recent years. The Commission on Widening Access (CoWA) target is that by 2030, students from the 20% most deprived backgrounds (SIMD20) should represent 20% of entrants to higher education, and that equality of access should be seen in the college and university sectors. Since the establishment of CoWA in 2015 there has been a 34% increase in the number of entrants from SIMD20 areas, and the first interim CoWA target was met early (to have 16% by 2021). In academic year 2022-23 16.3% of Scottish-domiciled full-time first degree entrants at Scottish Higher Education Institutions (HEIs) were from SIMD20 areas. However, the proportion of SIMD20 students continues to vary by institution and they are disproportionately represented in colleges and in certain universities.

1.2.2. Funding of student tuition in Scotland

Student funding in Scotland is bespoke to Scottish domiciled students and separate to the student finance systems in place in England, Wales and Northern Ireland.

Tuition is free for the majority of full-time Scottish-domiciled HNC, HND and undergraduate students (referred to here after as HN/undergraduate) attending a Scottish college or university. Students must apply to have their fees paid by Student Awards Agency Scotland (SAAS). If a Scottish-domiciled student is studying part-time, they may be eligible for the Part-time Fee Grant (PTFG). Scottish-domiciled HN/undergraduate students studying at institutions elsewhere in the UK are charged fees of up to £9,250 per year and may apply to SAAS for a tuition fee loan to assist with the cost of fees. While SAAS pays the fees for the majority of HN/undergraduate students in Scotland, postgraduate students must either fund their fees through tuition fee loans via SAAS, studentships from UK Research and Innovation (UKRI), institutional scholarships, or self-fund their studies.

For FE courses, tuition fees are primarily covered by individual colleges through a tuition fee waiver.

Tuition fees were introduced in the UK in AY 1998/99, when tuition fee payments of up to £1,000 for students throughout the UK were brought in, grants were abolished, and maintenance loans were increased in the following year. Responsibility for education was devolved to Scotland by The Scotland Act 1998. In response to the recommendations in 1999 of Scotland's Independent Committee of Inquiry into Student Finance (known as the Cubie Commission), Scotland replaced tuition fees with a graduate endowment payment of £2,000 in 2001/02 and reintroduced means-tested grants. The graduate endowment was later scrapped by the Scottish Government in 2007/08, with the Scottish Government establishing its intention that 'access to education should be based on the ability to learn, not the ability to pay'.

Meanwhile, tuition fees continued to increase in the rest of the UK; first rising up to £3,000 in England and Northern Ireland in 2006/07, before a further increase in fees of up to £9,000 in England in 2012/13 in response to the Browne review. Tuition fees in England and Wales are currently set at up to £9,250 per year. Fees are lower in Northern Ireland at up to £4,750 per year.

Although tuition is free for most students in Scotland, students must find ways to support their living costs like in other parts of the UK. Most do so via a combination of repayable student loans and non-repayable bursaries, part-time work, social security benefits, scholarships and family contributions. The Scottish Government provides a range of bursaries targeted at those from lower income households, care experienced and estranged students, and those studying specific courses.

1.2.3. Current student support in Scotland

The amount of student support for living costs provided by the Scottish Government varies depending on whether study is at 1) FE level; 2) HE level (HNC, HND and undergraduate degree) or 3) postgraduate level, with students studying different qualification levels eligible for different forms of support. Other factors which impact on the type of support and the financial amount students may be eligible for include:

• whether study is part-time or full-time
• the student's age
• their household income; and
• residency.

At the time of the research (2023 to 2024), eligible FE students were entitled to an FE bursary of up to £5,398.65 for the academic year, equivalent to £125.55 over 43 weeks.

HN/undergraduate students from the lowest income households (earning less than £21,000) were entitled to a total financial support package of £9,000 per academic year, consisting of a mixture of bursary and loan. Those whose household income was £34,000 or more were eligible for a £6,000 living cost loan. A summary of the support available to Scottish-domiciled HN/undergraduate students in 2023-24 is provided in Table 1.3 in the Appendix. Additional support for specific groups of HN/undergraduate students (e.g. care experienced students, estranged students, student carers, student parents, and disabled students) is also available. For example, colleges and universities in Scotland are considered corporate parents under the Children and Young People (Scotland) Act 2014. This means that they have a legal duty to support the needs of care experienced children and young people, and to promote their wellbeing.

At postgraduate level in 2023 to 2024, Postgraduate Diploma and Masters students were eligible to apply for a tuition fee loan of £7,000 and a living cost loan of £4,500. The Scottish Government does not directly fund PhD students. PhD students may receive a stipend for the agreed duration of their research project from various funders which include their university or an external funder such as UKRI. Some PhD students self-fund their studies.

Tables 1.1 and 1.2 in Appendix A provide a summary of the various types of financial support available to students at different qualification levels and from different backgrounds. Further, more detailed, information on the various forms of Scottish financial support are provided at relevant points in the report to help contextualise the findings.

1.2.4. Rising concern about students' financial experiences and wellbeing

In recent years there has been rising concern that students may be experiencing increasing levels of financial hardship and that this may be impacting on their academic and social experiences of study, and on their mental health and wellbeing.

Although the Scottish Government's free tuition policy ensures overall levels of student loan debt in Scotland are lower than in the rest of the UK, the majority of Scottish students incur student loan debt for living costs, and levels of student debt in Scotland have increased. Student Loans Company data shows that in 2023-24, Scottish students' average loan balance upon entering repayment was £16,680, up from £6,050 in 2010-11. For some Scottish students, the amount owed will be considerably higher. Blackburn's analysis of the distribution of student loan debt, using Student Loan Company data, found student loan borrowing in Scotland was skewed towards those from lower incomes, with the likelihood of students taking out student loan debt reducing as their family income rose. There is some evidence to suggest that attitudes to student loan debt may influence students' HE and postgraduate decisions, for example choosing to study locally and work during term-time to avoid student loan debt.

Research has also highlighted the impact of lack of knowledge and understanding of student loans and bursaries on student loan take-up. Scottish school leavers interviewed about how student funding influenced their HE decisions often confused student funding available in Scotland with that in the rest of the UK. Interest rates on student loans in Scotland have risen in recent years, meaning it may take graduates longer to repay their loans in full. While interest rates have increased in Scotland from 1.5% in 2021-2022 to 6.25% in 2023 to 2024 at the time of the research; this compares with 7.3% from some borrowers in England in November 2023.

NUS Scotland's 2010 survey of students highlighted the hardship students experienced as a result of a student support system which was deemed 'insufficient to cover their needs'. More than ten years later, in 2022, NUS Scotland's Broke report found the inadequacy of financial support continued to be problematic for students. Student surveys also highlight the challenge of coping financially over the summer when student support is not provided, with 74% of students responding to a Scottish Government survey reporting that they experienced financial difficulties during the summer of 2021. Since 2022-2023, students in receipt of the Care Experienced Student Bursary have had the option to choose to receive their payments over the full calendar year rather than the academic year. This option has also now been extended to eligible full-time HN/undergraduate students in 2024-2025.

The majority of students undertake part-time work alongside their studies to supplement their student funding. In 2022, a survey conducted by NUS Scotland of more than 3500 Scottish students found that 74% of HN/undergraduate students did so, followed by 65% of postgraduates and 50% of FE students. The same survey also found that only a third of Scottish FE, HE and Postgraduate students worked fewer than the recommended 10 hours per week, while a 2023 NUS Scotland survey found 28% of FE, 22% of HE and 19% of Postgraduate students worked more than 20 hours per week. While paid work enables some students to participate in study, student surveys and qualitative interviews with HE students from under-represented groups have highlighted the sometimes detrimental impact of part-time work on students' ability to study. Paid work may reduce the time students have available to study, can make them more tired and increase stress. It can impact students' ability to participate in the broader aspects of studying and wider student experience, making it harder to find time to meet new people, socialise or join clubs and societies.

The increasing cost of living has exacerbated the financial difficulties some students face. In a survey conducted by the Office for National Statistics, 91% of participating students were worried about the rising cost of living. Research has found that students are engaging in a number of cost-cutting behaviours, including skipping meals; using less electricity or gas; increasing paid working hours; skipping classes to reduce travel costs; and using food banks.

Recent years have also seen rising rental costs, particularly in some Scottish cities, an increase far greater than inflation during this period. NUS and Unipol's accommodation costs survey found that student rent in Scotland increased at a faster rate between 2018 and 2021 than any other part of the UK. Meanwhile, the Royal Bank Student Living Index found that Edinburgh and Glasgow have some of the highest costs of living in the UK. In 2018, an analysis of UK-wide 2014-2015 student records data from the Higher Education Statistics Agency (HESA) found that Scotland has higher proportions of commuter students than elsewhere in the UK. Other Scottish studies have highlighted the link between living at home while studying and a desire to reduce or avoid accommodation costs. Without access to family support, the cost of paying for accommodation is a particular struggle for care experienced and estranged students. In 2022, a third (33%) of estranged students and 29% of care experienced students in Scotland had experienced homelessness, compared with 10% of all students.

Surveys of Scottish students have found worrying about money is a key source of stress and something which can impact on students' overall mental health and academic achievement: 74% of Scottish university students, and 64% of college students, reported low mental wellbeing. A 2022 student survey by NUS Scotland highlights the close association between financial hardship and mental health with 60% expressing worry or stress about their finances and 12% experiencing homelessness. Worries caused by financial difficulties can also impact on retention and drop out. In Scotland, 37% of students responding to NUS Scotland's 2023 online survey said they had considered dropping out for financial reasons.

Some groups of students have been found to face higher levels of financial difficulty than others; for example, estranged students; student parents; disabled students, and other students from under-represented backgrounds. Estranged students in particular face high levels of precarity and poverty, while 75% of student carers surveyed by the Carers Trust said that finances and budgeting were challenging.

1.2.5. Recent policy responses to student funding

The 2017 Independent Review of Student Support called for a Minimum Student Income of £8,100 in FE/HE, and recommended student loans be extended to FE. The Scottish Government's 2019 review of student funding in FE found that many were unable to meet their essential living costs, particularly lone parents and mature students. ScotCen's 2022 research with estranged students for the Scottish Government found existing student support may not cover students' essential costs, leaving them at risk of homelessness, drop out and poor mental health. A review of Disability Related Student Support was undertaken in 2020 and 2021 by SAAS on behalf of the Scottish Government. The review's surveys and focus groups of FE and HE disabled students and staff in colleges and universities, highlighted the lack of information on disability related student support across FE and HE.

The publication of the 2021/22 Programme for Government reaffirmed the Scottish Government's commitment to the principle of free tuition, while also committing to expanding the total student support package to reach the equivalent of the Living Wage over the next three years, and reviewing the funding provision for postgraduate students.

The Scottish Government has responded with additional investment in bursaries and student loans; however, student loans remain unavailable to FE students. In recent years, the overall combined income available to students (either through a combination of loans and bursaries for those enrolled on HN/undergraduate courses, or through bursaries alone for those in FE) has increased. Other changes include:

• The increase in the HE bursary income threshold in 2019 from £19,000 to £21,000 which aimed to support more students from the lowest income households to access the highest levels of support
• In January 2022, free bus travel was extended to all under 22s resident in Scotland
• A £350 uplift in support for HNC, HND and undergraduate students in 2022-2023 as a first step to delivering the Scottish Government's Living Wage commitment
• A £900 uplift in support for HNC, HND and undergraduate students in 2023 to 2024 as the second step to delivering the Living Wage commitment
• An 11.1% inflationary uplift applied to FE bursaries in 2023 to 2024
• The student loan repayment threshold has increased annually to £27,660 in 2023 to 2024, meaning students do not begin repaying their loans until they earn more
• The creation of a bespoke pakage of support in academic year 2023 to 2024 for HE students who are estranged from their parents/legal guardians/carers which includes the Estranged Student Bursary (£1,000)
• A £1,500 uplift applied to the postgraduate tuition fee loan in 2023 to 2024.

Whilst undertaking this research, the Scottish Government announced plans to increase levels of student support for the 2024-2025 academic year with a £2,400 Special Support Loan for HN/undergraduate and postgraduate students (see Table 1.4 for details). This will make the support available to HN/undergraduate students who are care experienced, estranged or from the lowest income households (below £21,000) equivalent to the Living Wage (£11,400 for the year). The £2,400 loan uplift will also be made available to full-time Postgraduate Diploma and Masters students, increasing the total loan available to them to £13,900. The Special Support Loan will not be taken into account by the Department for Work and Pensions (DWP) when assessing students' entitlement to benefits, such as Universal Credit. Also for the 2024/25 academic year, HN/undergraduate students will be provided with the option to receive their student support payments over 12 months, allowing them to continue to receive their payments over the summer period.

To conclude, this brief policy review, and the more detailed literature review undertaken as part of SFWS, point to increasing concern for students' finances in Scotland. This is reflected in the recent policy responses to student funding. However, there remain gaps in the research literature in relation to the financial experiences of students at all levels in Scotland, but particularly among FE and postgraduate students and some student groups with protected characteristics. The findings outlined in this report aim to address this by providing baseline data on students' financial experiences and to better understand the impact of finances on students' lives.