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

8. Savings and borrowing

8.1. Introduction

In the survey, qualitative interviews and focus groups, students were asked about their experiences of savings and borrowing. The survey findings are explored by level of study and groups of specific interest to this study. The qualitative research provides insight into the experience and impact of savings and borrowings.

8.2. Key findings

• FE students had the lowest level of savings at the start of the academic year (37%), followed by students from under-represented groups (49%), part-time HN/undergraduate students (51%) and full-time HN/undergraduate students and postgraduate students (71% and 70%, respectively).
• The level of predicted savings at the end of the academic year were highest among postgraduate students (49%) compared with 45% of full-time HN/undergraduate students, 30% of part-time HN/undergraduate students, 28% of students from under-represented groups, and 19% of FE students.
• FE students had median savings of £500 at the start of the academic year, compared with £1,513 for students from under-represented groups, £2,000 for both full-time and part-time HN/undergraduate students, and £4,000 for postgraduate students.
• By the end of the academic year, predicted median savings were £700 for FE students, £2,500 for students from under-represented groups, £3,000 for both full-time and part-time HN/undergraduate students, and £6,000 for postgraduate students.

For borrowing, the following proportions of students from each of the four key groups had predicted borrowings at the end of the academic year:

• 44% of FE students (with a median amount of £900).
• 68% of HN/undergraduate students (with a median amount of £10,000 for full-time and £3,075 for part-time students).
• Nearly two-thirds (63%) of postgraduate students (with a median amount of £7,000).
• Around two-thirds (64%) of students from under-represented groups (with a mean amount of £6,000).

For FE, HN/undergraduate students and students from under-represented groups those aged 25 and over were more likely to have borrowings than students aged 20 to 24 and aged 16 to 19, as were those living independently (with rent or mortgage) compared with those living with their parents.

Among the five main areas of borrowing, student loans accounted for the largest amount of overall borrowing for each of the following:

• 45% of HN/undergraduates total borrowing (with a median of £10,400)
• 36% for postgraduate students (with a median of £8,000)
• 27% for students from under-represented groups (with a median of £10,000).

Net debt was calculated for each student by subtracting the predicted amount of savings at the end of the academic year, from the total amount of predicted debt or borrowing.

• The majority of students with savings and borrowings were predicted to have negative net debt by the end of the academic year

The median predicted net debt was:

• £900 for FE students
• £2,734 for HN/undergraduate students
• £9,000 for postgraduate students
• £4,500 for students from under-represented groups.

The proportion of net debt was:

• higher among full-time HN/undergraduate compared with part-time students (96% and 88%, respectively)
• lower for those students from under-represented groups aged 16 to 19 compared with those aged 25 and over (83% and 92%, respectively)
• higher for those students from under-represented groups living independently (renting or with a mortgage) compared with those living with their parents (93% and 85%, respectively).

8.3. Savings

All students taking part in the survey were asked about their levels of savings at the start of the academic year and their predicted levels of savings by the end of the academic year.

8.3.1. FE student savings

Savings at the start of the academic year

Around two-thirds of FE students (63%) did not have savings at the start of the academic year. Among the third that did (37%), the median amount they had saved was £500.

Younger FE students were more likely than older FE students to have savings at the start of the academic year (48% of those aged 16 to 19 and 27% of those aged 25 and over), as were FE students whose parents had experience of higher education (HE) (54%) compared with those whose parents had no experience of HE (26%). Furthermore, FE students living with their parents were more likely to have savings at the start of the year (50%) than those living independently (renting or with a mortgage) (27%).

FE students from the 20% most deprived areas (28%) were less likely to have savings than those from the 80% least deprived areas (43%).

Savings at the end of the academic year

Around 1 in 5 (19%) FE students reported that they expected to have savings at the end of the academic year which was lower than the 37% who stated that they started the academic year with savings.

The differences between subgroups of FE students who predicted having savings at the end of the academic year followed a similar pattern to those for savings at the start of the academic year. Younger FE students were more likely than older FE students to predict that they would have savings at the end of the academic year (26% of those aged 16 to 19 and 13% of those aged 25 and over), and a higher proportion of FE students whose parents had experience of HE predicted having savings at the end of the academic year (23%) than students whose parents had no experience of HE (19%). However, while a lower proportion of FE students from the 20% most deprived areas had savings at the start of the academic year than those from the 80% least deprived areas, predicted savings at the end of the academic year were similar for both groups (15% of students from the 20% most deprived areas and 19% of students from the 80% least deprived areas). Around a quarter (27%) of those living with their parents predicted having savings at the end of the academic year, compared with 14% of those living independently (renting or with a mortgage).

8.3.2. HN/undergraduate student savings

Savings at the start of the academic year

Full-time HN/undergraduate students were more likely than part-time HN/undergraduate students to have savings at the start of the academic year (70% and 51%, respectively). The median amount saved at the start of the academic year for both full-time and part-time HN/undergraduate students was £2,000.

There was no difference between full-time female and male students in the proportion who had savings, however, a slightly higher proportion of male part-time students (57%) had savings than female part-time students (48%). Among HN/undergraduate full-time students with savings, the median amount saved was £2,000 for females and £3,000 for males. Part-time HN/undergraduate female students had median savings of £1,000 and male part-time students £2,500.

Those who had parents with HE experience were more likely to have savings at the start of the academic year. For example, nearly 3 in 5 (59%) HN/undergraduate part-time students who had parents with experience of HE compared with around 2 in 5 (44%) of part-time students whose parents did not have experience of HE had savings. Median amounts of savings among part-time HN/undergraduate students whose parents had experience of HE was £1,500 and for those whose parents did not, £2,000.

Students from the 20% most deprived areas were less likely to have savings than those from the 80% least deprived areas. For example, nearly two-thirds (58%) of full-time students from the 20% least deprived areas had savings compared with around three-quarters (74%) of full-time students from the 80% most deprived areas. Full-time HN/undergraduate students from the 20% most deprived areas reported a median amount of savings of £1,250 compared with £2,500 for those from the 80% least deprived areas.

Full-time students aged 25 and over were the least likely to have savings (45%) compared with 73% of those aged 20 to 24, and 86% of those aged 16 to 19. The median amount saved was £1,500 for full-time HN/undergraduate students aged 25 and over and £2,000 for those aged 16 to 19. This compares with £3,000 for full-time students aged 20 to 24. There were no differences by accommodation type in the level of savings for HN/undergraduate students.

Savings at the end of the academic year

Overall, 42% of HN/undergraduate students reported having predicted savings at the end of the academic year, with this being more likely for full-time students (45%) than part-time students (30%). Median predicted savings of £3,000 were reported for both full-time and part-time students at the end of the academic year.

HN/undergraduate students whose parents had experience of HE (51% for full-time and 34% for part-time students) were more likely to predict having savings at the end of the academic year than those whose parents had no HE experience (37% for full-time and 28% for part-time). For those whose parents had HE experience, full-time students reported a median amount of predicted savings of £3,500, while part-time students reported a median of £3,000 compared with £2,000 for full-time students whose parents did not have HE experience and £2,500 for part-time students.

The proportion of HN/undergraduate students who predicted having savings was similar for full-time male (47%) and female (44%) students (but higher among part-time male (46%) than female students (24%). Full-time male students predicted a median savings amount of £4,000 compared with £2,500 for full-time female students. Part-time male students had a predicted savings median of £3,000 and it was £2,500 for part-time female students.

Overall, HN/undergraduate students aged 25 and over were less likely to predict they would have savings at the end of the year (23% for full-time) compared with those aged 20 to 24 (54% for full-time and those aged 16 to 19 (53% for full-time). Full-time students aged 25 and over had median predicted savings of £2,500, those aged 20 to 24 had £4,000, and for those aged 16 to 19, it was £2,500.

A higher proportion of HN/undergraduate students from the 80% least deprived areas had predicted savings at the end of the academic year (49% for full-time and 32% for part-time students) than those from the 20% most deprived areas (34% for full-time and 21% for part-time). Full-time students from the 80% least deprived areas reported a median amount of predicted savings at the end of the year of £3,000 and those from the 20% most deprived areas a median amount of £2,000.

8.3.3. Postgraduate student savings

Savings at the start of the academic year

Similar to HN/undergraduate students, around two-thirds of postgraduate students (71%) had savings at the start of the academic year, with the median amount saved being £4,000 compared with median amounts of £2,000 for HN/undergraduate students and £500 for FE students.

The proportion of postgraduate students with savings at the start of the academic year was similar for females (72%) and males (70%) with the median amount saved by females being £4,000, and £5,000 by males. Postgraduate students aged 20 to 24 were more likely than those aged 25 and over to have savings at the start of the academic year (82% and 68%, respectively). The median amount saved was £4,000 for students aged 20 to 24 and £4,700 by those aged 25 and over.

As for FE and HN/undergraduate students, postgraduate students whose parents had experience of HE were more likely to have savings at the start of the academic year (76% and median amount saved of £4,700), than those whose parents had no experience of HE (64% and median amount saved of £4,000).

For postgraduate students from the 80% least deprived areas, 72% reported having savings at the start of the academic year with a median amount saved of £4,700 compared with 57% of students from the 20% most deprived areas having savings with a median amount of £2,500.

Savings at the end of the academic year

Around half of all postgraduate students (49%) predicted that they would have savings by the end of the academic year, compared with the 68% who stated that they started the year with savings. The median amount of savings predicted at the end of the year was £6,000 compared with £4,000 at the start of the year. The proportion of students who predicted having savings was similar among females (50%) and males (47%), with a median predicted savings amount of £5,000 and £7,000, respectively. Postgraduate students aged 20 to 24 (63%) were more likely to predict having savings at the end of the year than those aged 25 and over (46%) with levels of savings of £6,000 and £5,000, respectively.

A higher proportion of postgraduate students whose parents had experience of HE predicted having savings at the end of the academic year (55%) than those whose parents had no HE experience (43%). Those with parents with HE experience reported a median amount of predicted savings of £6,000 compared with £3,000 for those whose parents had no HE experience. A higher proportion of students from the 80% least deprived areas predicted having savings at the end of the academic year (52%) than students from the 20% most deprived areas (40%).

8.3.4. Savings of students in under-represented groups

Savings at the start of the academic year

Around half (49%) of students from under-represented groups had savings at the start of the academic year and among those who had savings, the median amount of money saved was £1,513. This compares with median amounts of £4,000 for postgraduate students, £2,000 for HN/undergraduate students and £500 for FE students.

The proportion of students from under-represented groups with savings at the start of the academic year was similar for male students (46%) and female students (49%). The median amount of savings for males was £2,800 and it was £1,500 for females. In terms of age, around 2 in 5 students aged 25 and over (39%) had savings at the start of the year, compared with around 3 in 5 students aged 20 to 24 and 16 to 19 (60% and 65%, respectively). The median amount of savings at the start of the academic year for students aged under 20 was £1,200 compared with £2,500 for those aged 20 to 24, and £1,500 for those aged 25 and over.

Those whose parents had experience of HE were more likely to have savings (62%), than those whose parents had no experience of HE (39%). However, the median amount was £2,000 for those whose parents had experience of HE and £1,250 for those with no HE experience.

Over 4 in 10 (45%) of those who were living independently (renting or with a mortgage) reported having savings at the start of the academic year with a median amount of £2,000, compared with around 6 in 10 of those living with their parents (64%) with median savings of £1,500. Students from under-represented groups from the 80% least deprived areas (56%) were more likely to have savings than those from the 20% most deprived areas (34%). The median amount of savings for those from the 80% least deprived areas was £2,000; for those from the 20% most deprived areas it was £750.

Savings at the end of the academic year

Overall the proportion of students from under-represented groups who expected to have savings at the end of the academic year was less than at the start of the academic year. Over a quarter (28%) of students from under-represented groups expected to have savings at the end of the year, compared with 49% at the start of the academic year, with a median amount at the end of the academic year of £2,500. The proportion of male and female students were similar (29% and 28%, respectively), with the median predicted savings for female students £2,000 and £3,000 for male students. Those aged 20 to 24 (41%) were most likely to predict having savings compared with students aged under 20 years (36%) and those aged over 25 (21%). Students from under-represented groups aged 20 to 24 had median predicted savings of £3,700 at the end of the academic year, and it was £2,500 for those aged 25 and over, and £2,000 for those aged 16 to 19.

A higher proportion of widening participation students whose parents had experience of HE predicted having savings at the end of the academic year (37%) than those whose parents had no HE experience (22%). Those with parents with HE experience had predicted savings of £3,000 compared with £2,000 for those whose parents did not. A higher proportion of students from the 80% least deprived areas predicted having savings at the end of the academic year (32%) than students from the 20% most deprived areas (19%). The median predicted savings for students from the 80% least deprived areas was £2,500 compared with £1,500 for those from the 20% most deprived areas. Additionally, those students from under-represented groups who were living with their parents were more likely (37%) than those living independently (renting or with a mortgage) (27%) to have predicted savings at the end of the year, with a median amount of savings of £3,000 and £2,500, respectively.

8.3.5. Impact of not having savings

Many students from all study levels who participated in the qualitative research for this study said they had no savings or were unable to put aside money regularly. This impacted negatively on students' self-esteem and mental health. Some worried about being able to move forward with their life, without being able to save up for the future.

"Doing a PhD, you're surrounded by people who are pretty well-off, or they come from a well-off background. A lot of them have savings, a lot of them have had flats bought for them by their parents, so they don't have to pay rent, so they can save. They think that actually income is not that important and it's totally fine, the stipend is not that bad. What am I complaining about? But actually for someone who hasn't had that sort of support and has to save and pay for all these things myself, it's a big deal. […] It makes me feel just like a child, like I'm just a student, I don't have extra resources, I can't save. (Full-time postgraduate (PhD) student)"

Postgraduate students who used their savings to pay tuition fees said doing so had exhausted all or most of their savings. While some students were able to rebuild their savings between Masters and PhD studies, through work, living at home rent free, or via inheritance, others were not able to replenish them. This demonstrates that even with some students able to save for particular purposes, once fees are paid they are left with no safety net.

Estranged students in the qualitative research also mentioned the financial worries they experienced from not having a safety net in terms of either personal savings or parental support, stating that this amplified worries about large or unexpected expenses which could force them into financial hardship.

"I'm doing my best to save whatever I can from my loans, my job and my disability payments to move out of halls. Regardless of what I save or whether, logically speaking, I'm in a comfortable spot or not, it always feels tight. It always feels like the moment something goes wrong or an emergency happens, I'm going to be completely f*****. (Estranged student focus group)"

8.3.6. Ways of saving

Students who were able to save described a number of sources for this. Some students were able to save due to having money left over from student financial support instalments or scholarships after paying their expenses, especially those whose parents made regular financial contributions. Parents also provided support through in-kind support such as allowing students to live in the family home without contributing financially which enabled students to build up their savings. Parental support also allowed some students to use the summer period to work and accumulate savings. One student noted that they would likely not be able to manage financially without this support.

"I worked at a hotel over the summer, just two months, and I made £2,500. My parents agreed that they wanted me to save that money for stuff that I wanted and not just put it towards rent, so they made sure that they didn't cut down what they gave me because I worked. That's more like recreational spending. (Full-time undergraduate student)"

Students also discussed strategies for saving such as using different types of bank account including savings accounts, stocks and shares Individual Savings Accounts (ISAs) or Lifetime ISAs, and use of budgeting. Students described putting money aside to their savings as soon as they are paid and topping up their savings regularly in order to continue to build this fund.

"I would say I'm quite good at it [managing money], to be fair. I've always made sure that I have… With my bank, I always make sure that I have a savings account set up. Obviously then as soon as my wages come in, it always gets sent to my savings account. A portion obviously gets put in my current account, but with that, I feel like I'm quite good with that. (Full-time undergraduate student)"

8.3.7. Impact of having savings

Students discussed the impact of having savings as being a positive one overall, with students describing it as a 'safety net' which reduced their worries about money. One student mentioned their savings could be used in a worst-case scenario, for example if they lost their job; another student mentioned using their savings in times of financial difficultly or for large or unexpected payments such as vehicle maintenance emergencies.

"I do have savings that I use when it gets a bit tight, but I really try not to use them at all. It's just there as a safety net if something was to go wrong with the car or if I needed to buy some equipment or something. It's just there as a fallback. (Part-time HNC/HND student)"

8.3.8. Selling possessions

Although not raised frequently in the interviews or focus groups, some students said they supplemented their incomes by selling their possessions (e.g. books, clothes etc.) or through running their own small business. Websites such as Vinted, Depop, Ziffit and Etsy were mentioned as platforms which students had used to sell their items from.

8.4. Borrowing

All students in the survey were asked about a range of different types of borrowing or debt they had and their predicted levels by the end of the academic year. This section focuses on the predicted levels of borrowing at the end of the year, and then compares savings and borrowing levels to produce findings on net debt to show whether students are borrowing more than they have in savings.

Students were asked about five specific different sources of borrowing, student loans or debt, which are reported on separately by student level, and are combined to create the overall predicted borrowing medians:

1. Commercial credit (including loans, credit and store cards)

2. Bank overdrafts

3. Being in arrears on household bills

4. Student loans from the Student Loan Company (SLC) (including both fees and maintenance loans), and

5. Any repayable part of a discretionary or hardship payment – as discretionary funding was almost entirely non-repayable, there is no data included on repayable discretionary payments.

8.4.1. FE borrowing

Total predicted borrowing at the end of the academic year

Overall, 44% of FE students had predicted borrowings at the end of the academic year with a median amount of £900. A higher proportion of females (49%; compared with 36% of males), and students aged 25 and over (68%; compared with 22% of students aged 16 to 19) had predicted borrowings at the end of the academic year. The median amount of borrowing for female FE students was £1,109 and £500 for male FE students. When comparing age, for students aged 25 and over this was £1,640 and £250 for those aged 16 to 19.

FE students whose parents had no experience of HE were more likely to have borrowings (56%; compared with 35% of students whose parents had experience of HE), with the median amount of their borrowings being £1300 and £500, respectively.

Finally, those living independently (renting or with a mortgage) were more likely than those living with their parents to have borrowings; 64% compared with 22%, respectively. The median amount of borrowings for those living independently (renting or with a mortgage) were £1,300 compared with £270 for those living with their parents.

In summary for FE, students who were female, students who were 25 and over, those whose parents had no experience of HE, and students who lived independently (renting or with a mortgage) were most likely to report predicted borrowings at the end of the 2023 to 2024 academic year.

Sources of borrowing

The survey covered 5 main areas of borrowing but as FE students are not eligible for students loans and no students had discretionary funding that needed to be repaid, these are not included below.

The main source of FE student borrowing and debt was being in arrears on household bills (35%), followed by commercial credit (22%) and overdrafts (14%).

The median total borrowing for FE students from each of these 3 main sources is shown in Table 8.1.

Table 8.1: Median total borrowing from each of the main sources for FE students

Source	Median (£)
Commercial credit	2,000
Arrears on household bills	300
Overdrafts	250

Approximately a third of females (36%) and males (33%) were in arrears on household bills. However, just over half of FE students aged 25 and over (51%) were in arrears compared with 1 in 5 of those aged 16 to 19 (20%). Those who were living independently (renting or with a mortgage) were more likely than those living with their parents to be in arrears on household bills (50% and 18% respectively).

Approximately a fifth (22%) of FE students had borrowings in the form of commercial credit. The proportion of students taking out commercial credit was higher for female (27%) than male students (12%) and for FE students aged 25 and over (43%, compared with 4% for those aged 16 to 19). A similar pattern was seen for overdraft borrowings, with 18% of female students having an overdraft, compared with 7% of male students, and students aged 25 and over (22%) having higher levels of overdrafts than those aged 16 to 19 (6%). Borrowings from commercial credit and arrears were higher for students whose parents had no experience of HE than students whose parents had experience of HE. For example, 30% of students whose parents had no experience of HE had some form of commercial credit, compared with 16% of those whose parents had experience of HE.

A higher proportion of FE students from the 20% most deprived areas were in arrears on household bills compared with those in the 80% least deprived areas (42% and 29%, respectively). There was no difference by area deprivation for borrowing from commercial credit or overdrafts. Those who were living independently (renting or with a mortgage) were more likely than those living with their parents to have an overdraft (23% and 6%, respectively).

As the proportion of FE students with borrowings, loans or other debts in specific categories is low (between 14% and 35%), it is not possible to report on the median amounts for these subgroups due to low base sizes in the sample.

8.4.2. HN/undergraduate borrowing

Total predicted borrowing at the end of the academic year

Overall, 68% of HN/undergraduate students predicted that they would have borrowings by the end of the academic year. The median amount of borrowings was £8,500; £10,000 for full-time HN/undergraduate students and £3,075 for part-time students. It should be noted that the amount for full-time students includes any student loans, whereas part-time students are not entitled to student loans for living expenses.

A higher proportion of HN/undergraduate students aged 25 and over had borrowings compared with those aged under 20 (77% and 55%, respectively). The median amount of borrowing for full-time students aged 25 and over was £9,650, for those aged 20 to 24 it was £12,400 and for those aged under 20, £7,000. The median amount of borrowings for full-time and part-time students were similar (£3,500 and £4,000, respectively) and the median amounts were the same for those from the 20% most and the 80% least deprived areas (£10,000).

HN/undergraduate students whose parents had no experience of HE were slightly more likely to have borrowings (72%) compared with students whose parents did have experience of HE (67%). The median amount of borrowing was £7,450 for those whose parents had no experience of HE compared with £10,000 for those whose parents did have experience of HE. A similar pattern was seen for both full and part-time students.

There were no differences in the level of borrowing between full-time females and males (70% for both), however a higher proportion of part-time female students had borrowings (65%) compared with part-time male students (50%). The median amount of borrowing for full-time females was £9,000 and £11,500 for males. For part-time students, it was £3,075 for females and £2,600 for males. Those who were living with their parents were less likely to have borrowings (51% of full-time and 39% of part-time students), compared with those living independently (renting or with a mortgage) (79% of full-time and 69% of part-time students).

Sources of borrowing

The main source of HN/undergraduate students borrowing and debt was student loans (45%), followed by commercial credit (28%), being in arrears on household bills (22%), and overdrafts (16%).

The median total borrowing for HN/undergraduates from each of these 4 main sources is shown in Table 8.2.

Table 8.2: Median total borrowing from each of the main sources for HN/undergraduate students (£)

Source	All HN/ undergraduate students	Full-time	Part-time
Student loans	10,400	10,590	7,000
Commercial credit	2,500	2,500	3,000
Arrears on household bills	500	500	500
Overdrafts	625	700	475

Over half of all HN/undergraduate students aged 20 to 24 years (56%) had student loans, compared with 47% of those aged under 20, and 34% of those aged 25 or over. A higher proportion of those whose parents had experience of HE had student loans compared with those whose parents did not (50% and 40% respectively).

Over a quarter (28%) of HN/undergraduate students had borrowings in the form of commercial credit, which was higher for HN/undergraduate students aged 25 and over (55%) than those aged 20 to 24 years (18%) and those aged 16 to 19 (6%). In contrast to student loans, HN/undergraduate students whose parents had experience of HE were less likely to have commercial credit (20%) than students whose parents had no experience of HE (39%). Nearly half of part-time students had commercial credit (47%) compared with around a quarter of full-time students (23%).

Approximately a fifth of HN/undergraduate students (22%) were in arrears on household bills. As with commercial credit, HN/undergraduate students aged over 25 (36%) were more likely to be in arrears on household bills than those aged 20 to 24 (17%), and those aged 16 to 19 (11%). HN/undergraduate students whose parents had no experience of HE (29%) were more likely than those whose parents had experience of HE (17%) to be in arrears on household bills.

The findings for overdrafts followed a similar pattern to commercial credit and arrears in household bills with HN/undergraduate students aged over 25 (25%) more likely to have an overdraft than those aged 16 to 19 (5%). HN/undergraduate students whose parents had no experience of HE (20%) were also more likely than those whose parents had experience of HE (13%) to have an overdraft.

While the proportion of HN/undergraduate students who had student loans did not differ by area deprivation, the proportion that had commercial credit, arrears in household bills and overdrafts was higher for HN/undergraduate students from the 20% most deprived areas compared with those from the 80% least deprived areas. For example, over a third of students from the 20% most deprived areas (37%) were in arrears on household bills, this compared with 19% of those from the 80% least deprived areas.

The proportion of HN/undergraduates with student loans, commercial credit, arrears in household bills and overdrafts was highest among those who lived independently (with a rent or mortgage) compared with those who lived with their parents. For example: one third (33%) of those living independently (with a rent or mortgage) have commercial credit compared with 16% who are living with their parents. And nearly half (49%) of those who lived independently (with a rent or mortgage) had a student loan compared with 37% of those living with their parents.

8.4.3. Postgraduate borrowing

Total predicted borrowing at the end of the academic year

Nearly two-thirds (63%) of postgraduate students predicted that they would have borrowings by the end of the academic year, with a median amount of borrowings of £7,000.

The proportion with borrowings was similar among females (64%) and males (61%), with a median amount of borrowings of £7,000 and £7,500 respectively. Students aged 25 and over were more likely than those aged under 20 years to have savings (37% and 27%, respectively). The median amount of borrowings for postgraduate students aged 20 to 24 was £17,000 and for those aged 25 and over was £6,800.

Postgraduate students whose parents had no experience of HE and those whose parents did (69% and 60% respectively). Those in the former had a median amount of £9,500, compared with students whose parents had experience of HE with a median amount of £7,000. Students from the 20% most deprived areas (80%) were also more likely to have borrowings than students from the 80% least deprived areas (61%).

Sources of borrowing

The two main sources of postgraduate student borrowing and debt were commercial credit (42%) and student loans (36%), followed by overdrafts (20%) and being in arrears on household bills (19%).

The median total borrowing for postgraduate students from each of these 4 main sources is shown in Table 8.3.

Table 8.3: Median total borrowing and percentage of students borrowing from each of these sources for postgraduate students

Source	Percentage with borrowing	Median (£)
Commercial credit	42%	3,300
Student loans	36%	8,000
Overdrafts	20%	1,000
Arrears on household bills	19%	500

Commercial credit was higher for postgraduate students aged 25 and over (50%) than for those aged 20 to 24 (15%). In contrast, the proportion of those with student debt was higher for postgraduate students aged 20 to 24 (49%) than for those aged 25 and over (33%). A similar proportion of females and males had commercial credit, student loans and were in arrears on household bills.

Postgraduate students whose parents had no experience of HE were more likely than those whose parents did not to have commercial credit and be in arrears on household bills. For example, 25% of students whose parents had no experience of HE reported being in arrears on household bills compared with 16% of those whose parents had experience of HE.

Postgraduate students from the 20% most deprived areas were more likely than those from the 80% least deprived areas to have borrowings in the form of overdrafts and arrears on household bills. For example, 38% of postgraduate students from the 20% most deprived areas had arrears on household bills compared with 17% of those from the 80% least deprived areas.

8.4.4. Students from under-represented groups

Total predicted borrowing at the end of the academic year

Around two-thirds (64%) of students from under-represented groups had predicted borrowings at the end of the academic year, similar to both HN/undergraduate and postgraduate students, but higher than the 44% of FE students with predicted borrowings. The median amount of borrowings for students from under-represented groups was £6,000 compared with £900 for FE students, £7,000 for postgraduate students and £8,500 for HN/undergraduate students.

Older students from under-represented groups were more likely to have borrowings compared with younger students, 74% of those aged 25 and over compared with 37% of those aged 20 to 24 years, and 58% of those under 20 years. The median amount of borrowings for students from under-represented groups aged 25 and over was £5,125, for those aged 20 to 24 was £11,100, and for those aged under 20 years was £5,400. The proportion of females (66%) and males (61%) with borrowings was similar, with median amounts of borrowings of £5,850 and £6,150, respectively.

Students from under-represented groups whose parents had no experience of HE were more likely to have borrowings (74%) than students whose parents had experience of HE (59%), with median amounts of borrowings of £5,750 and £7,750, respectively. Three-quarters (74%) of those who were living independently (renting or with a mortgage) had borrowings compared with 41% of those living with parents, with median total amounts of £6,300 and £5,700, respectively.

Similar proportions of students from under-represented groups from the 20% most deprived areas (67%) and from the 80% least deprived areas (64%) had borrowings. The median amount of borrowings for students from under-represented groups from the 80% least deprived areas was £6,150, and for those from the 20% most deprived areas was £3,750.

Sources of borrowing

The main sources of borrowing and debt for students from under-represented groups were commercial credit (35%) and being in arrears on household bills (32%), followed by student loans (27%), and overdrafts (20%).

The median total borrowing for students from under-represented groups from each of these 4 main sources is shown in Table 8.4.

Table 8.4: Median total borrowing from each of the main sources for students from under-represented groups

Source	Median (£)
Commercial credit	2,500
Arrears on household bills	500
Student loans	10,000
Overdrafts	500

Those aged 25 and over were more likely to have commercial credit and be in arrears on household bills than those aged 24 or under. For example, 55% of students from under-represented groups aged 25 and over had commercial credit, compared with 19% of those aged 20 to 24, and 6% of those aged under 20. Similarly, a higher proportion of those aged 25 and over (25%) had overdrafts compared with those aged under 20 (7%). In contrast, students from under-represented groups aged 20 to 24 years (40%) were the most likely to have student debt compared with those aged under 20 years (26%), and those aged 25 and over (24%). The proportion of students who had commercial credit, student loans, were in arrears on household bills and had overdrafts was similar for males and females, for example 36% of both females and males had commercial credit.

Those who were living independently (renting or with a mortgage) were more likely than those living with their parents to have commercial credit, student loans, borrowings from an overdraft, and be in arrears on household bills. For example, 44% of widening participation students who were living independently (renting or with a mortgage) had commercial credit compared with 13% of those living with their parents.

The proportion of students from under-represented groups with borrowings from commercial credit and arrears were higher for those whose parents had no experience of HE (47% and 40%, respectively) than students whose parents had experience of HE (27% and 24%, respectively).

The proportion of those in arrears was higher for students from under-represented groups from the 20% most deprived areas (46%) compared with those from the 80% least deprived areas (27%). For commercial credit, student debt and overdrafts, the level of borrowing was similar for those from the 20% most deprived and the 80% least deprived areas.

8.4.5. Predicted net debt at the end of the academic year

By comparing student savings and borrowing, it is possible to consider a student's overall financial position. Student net debt was calculated for each student by subtracting the predicted amount of savings at the end of the academic year, from the total amount of predicted debt or borrowing that they would owe at the same point.

Around 9 in 10 HN/undergraduate students (94%), postgraduate students (95%) and students from under-represented groups (90%) were predicted to have negative net debt (where their borrowing is higher than any savings) by the end of the academic year. This compared with 8 in 10 of FE students (83%) who were predicted to have negative net debt by the end of the academic year.

For FE students, there were no differences by subgroups in the level of predicted net debt by the end of the academic year. The median amount of net debt for FE students was £900.

For HN/undergraduate students, the level of predicted net debt was similar for female and male students and all age groups but was slightly higher among full-time HN/undergraduate students (96%) compared with part-time students (88%). The median amount of net debt was £2,734.

The proportion of postgraduate students with predicted net debt did not vary by subgroups and the median amount of net debt predicted by the end of the academic year was £9,000.

The proportion of students from under-represented groups with predicted net debt was lower for those aged 16 to 19 (83%) compared with those aged 25 and over (92%). Those living independently (renting or with a mortgage) were more likely (93%) than those living with their parents (85%) to have predicted net debt. The median amount of net debt for students from under-represented groups was £4,500.

8.5. Commercial credit

This section explores findings from the qualitative research on the use of commercial credit, that is, credit acquired from commercial bodies which is distinct from student loan debt. The section outlines the types of credit used by students, their reasons for using credit, their attitudes to taking on commercial credit or other commercial debt, and the impact of this on their financial and mental health. Qualitative insights on student loans from students taking part in this study can be found in Chapter 5.

8.5.1. Types of commercial credit

The qualitative research found students were drawing upon a wide range of commercial credit in order to support their finances. Students accessed different types of commercial credit, including both formal and informal credit agreements. Most commonly discussed were overdrafts, store cards, credit cards, buy now pay later schemes (e.g. Klarna, PayPal, Pay in 3), and catalogue credit. Students also mentioned having used door-to-door and payday loans.

8.5.2. Reasons for using commercial credit

Students used commercial credit for a number of reasons which are outlined below.

Using credit to cover everyday essentials

Students were primarily using commercial credit because their income was insufficient to cover essential costs such as accommodation, utility bills and food. Some students only experienced difficulty paying for essentials over the summer when the majority of bursary and loan payments ceased. Without these payments students experienced considerable hardship and had to rely on credit to get by. A student described having to use their overdraft to pay their rent after using up their savings to compensate for the suspension of student loan instalments over the summer. It took some time for them to repay the overdraft and overdraft fees.

"I was paying rent out of my overdraft. I think I was like I was in the pits of my overdraft and I think it was like minus £1,500, plus all my savings were gone. So, for months after that I was paying off fees on my overdraft. I think now I break even every month so I just kind of come up on zero, which is what it is. But now I've opened that new bank account so if I do need to use my overdraft, I'm not getting charged on it. (Full-time postgraduate (PhD) student)"

Other students relied on credit during term time as well as over the summer period, using credit cards, store cards and overdrafts to pay for their essentials. For some this was due to insufficient income from student loans, bursaries, paid work or benefits. For others, this was to cover large or unexpected payments. These students said they generally had just enough income from their student support and other sources to cover their everyday expected payments, but that for anything out of the ordinary they turned to commercial credit. Unexpected and/or large payments mentioned by students included everyday living costs such as boiler breakdowns, car servicing, rental deposits and furniture.

Those who mentioned taking out commercial credit to pay for essentials or for large or unexpected payments often said they were only able to make the minimum or interest-only repayments on their credit. Accumulating high interest on debts, particularly for those only able to make minimum repayments, perpetuated students' financial difficulties.

"I am reducing [credit card debt] a little bit, so it's just hard because every time you get better and then another expense, it comes, because at the moment my earnings just enough to pay everyday expenses. So, if you have, say, Road Tax, I just paid recently so that's not in the budget so that comes on the credit card and all these kinds of things. Over time, any extra expenses like service for the car is £300, or for the boiler, so all those normally come off the credit card because my earnings only pay for the everyday bills, monthly bills. (Part-time undergraduate student parent)"

"I'm currently paying off quite a lot of debts, to be honest, just over the last two years. I've racked up credit cards and payday loans and then the [store card]. Just paying the minimum that I can just to keep myself going. [Store name] was to get beds for the kids because they were all needing new beds and I just thought I need them, so that's how I took that out. But all the other stuff was just for day-to-day stuff and I just pay the minimum back, as much as I can. (Student parent focus group)"

Course-related costs

Students also discussed the use of credit for course-related costs, such as tuition fees, travel costs and course materials. There were postgraduate students who said they had to use an overdraft or a bank loan to pay postgraduate tuition fees, as these were not completely covered by the Postgraduate Support Package from SAAS. Others described using credit to buy equipment for their course, such as laptops.

Building credit score

Not all students used credit out of necessity. A key reason for using commercial credit among some students who reported experiencing less financial hardship was the desire to improve their credit score. These students were not reliant on credit to purchase essentials and generally did not use large amounts of credit frequently, instead paying the balance each month as a way to build their credit score and improve their financial health. These students demonstrated a high level of financial awareness.

"I have an overdraft and a credit card. I had the good fortune of working for a credit card company for a couple of years, though, so I know better than to get myself into any trouble and just generally use it to try and build credit. Very aware that in the future, if I want to try and get a mortgage and things, I'm not going to have any guarantor option or anything like that so I'm trying to be conscious of making that a bit better now. (Care experienced student focus group)"

8.5.3. Impact of commercial credit and debt

The impact of having commercial debt was mixed. While some students were able to manage their debt, others struggled. Those who were able to manage discussed adopting debt management strategies such as switching credit cards to maintain 0% interest rates on their balance, and of incorporating monthly repayments into their budget. Those who took on credit to build their credit score were most often able to manage their debt.

"I then got a balance transfer to a zero per cent one for 18 months or something and that's the one I've got just now. I'm paying that off. That comes into my bills. It's like £100 that I have to pay back. I'm just sticking with it. It worked out okay in the end and it's just part of my bills that I pay back now. (Estranged student focus group)"

Students who were struggling to pay their debt, described being in a cycle of repayment; as soon as they made a payment, they were immediately back into arrears. There were also students who relied on multiple sources of debt to make repayments, which compounded their debt and increased financial difficulty. As previously mentioned, students also discussed only being able to make minimum repayments or interest-only repayments, which made it more difficult for them to be free of debt.

"Because I had used all my savings and maxed out my overdraft, and then when I got paid my first stipend, I think I only saw about £500 of that because the rest of it just paid off my overdraft. Then each month was the same cycle; I would have to spend £400, £500 on rent and then I'd go straight back into my overdraft after paying rent, and then I'd get paid the next month and the same thing would happen. Every month it was just a continuous cycle. I just need a little bit extra so that I'm not paying off that overdraft so that I can start living off my stipend. (Full-time postgraduate (PhD) student)"

High interest rates and fees for missed or late payments significantly impacted students' ability to manage financially, making it more difficult to meet repayments and causing additional financial hardship when faced with fees. Some students mentioned the very high interest rates they were charged – both on official and unofficial commercial loans. One student said they were making interest-only repayments on credit cards with 30% interest. Others were paying much higher rates of interest, for example through payday loans or those provided by door-to-door lenders. The challenge of making these payments was raised, as were the high fees for late payments on pay-in-3 schemes such as Klarna and PayPal. Some students noted that they had stopped taking on this type of credit as a result. A student who had, out of desperation, taken out a loan from a door-to-door lender and was paying interest of almost 100%. They described the harassment they received from the lender and how they had to use their benefits to make the repayments, which left them in financial difficulty.

"It was a door-to-door loan; I don't know what you call them. Somebody coming every week and collecting payment off you. […] I've paid that off now, and now they're trying to get me to take more and I'm like no. […] I borrowed £200 and it was almost £400 I had to pay back. I'm not doing that again, I only did it because I was in dire straits but I'd never do that again. I did a pay day loan once and never again in my life will I do that again either. (Full-time FE student parent)"

There were also students who did not have any outstanding credit or debt, either due to them not needing additional funding, or because they expressed a clear aversion to debt. Debt averse students cited reasons for this including childhood experiences of poor financial management from their parents, worries over their ability to manage their own finances, and for estranged and care experienced students in particular, the lack of a financial safety net provided by parents if their debt became unmanageable.

"The idea of credit scares me so much. Growing up, I watched my parents constantly struggling to pay off different cards. So I swore to myself that even in dire, dire, dire times, I would rather sell everything I own than touch credit. That is even more so now that I don't have the support of my parents because if I end up in that hole, I will have no way to get back out of it. None at all. (Estranged student focus group)"

8.6. Approaches to financial management

The qualitative research sought to understand students' attitudes and behaviours towards financial management and the support available to them to manage their finances. Students had varying experiences of financial management, from using tools to help them budget and save, to having no financial management strategies and struggling to meet essential living costs. These experiences are explored in more detail below.

8.6.1. Financial management tools

Students expanded on how they managed their finances to ensure that they could pay their expenses, and in some circumstances, save money. A range of management tools and approaches were outlined.

Online resources

Students reported that they used support offered from their bank(s) to help them managing their finances. Banking apps and internet banking enabled students to regularly check their bank balance and track their spending. Saving accounts helped students put money aside for unexpected payments or save towards future expenses such as rent.

"I have quite a few bank accounts, so I have a bank account for my wages so it's just dedicated for that. Then I can manage and see my money and then I will try and move my money every month into different savings accounts. So, I can work out how much I have for that month and how much I really should be saving. (Full-time undergraduate student)"

Students shared that their banks, and other providers, also offered a range of financial support and information that helped them to develop their financial management knowledge and skills, such as online tutorials. Care experienced students also received training on financial management skills via the Share Foundation, and received incentives for completing the course. Students who participated in online tutorials and training thought that these resources were not commonly known about and would benefit from greater promotion.

"I think it's The Share Foundation. There is a financial course for helping you be responsible with your finances available to under-19 care experienced people. They pay you. For each part that you complete the course, you might get £500 and I think it adds up to a couple of thousand pounds in the process. It incentivises getting you to learn about being responsible with money, which I didn't know about for a long time. I don't know how many people know that's available or whether it's just me. Certainly, advertising that kind of thing - even if it's just for the financial incentive - people, I'm sure, would appreciate being more aware. (Care experienced student focus group)"

Budgeting

There were students who used budgeting to manage their finances. These students were aware of their overall income, when they would receive it and they planned out their spending accordingly. Some students would regularly track their spending and make adjustments to their budget or spending as required. While some students had experience of budgeting before starting their course, others were budgeting for the first time and were learning by trial and error.

"It's something that I definitely taught myself over the last year-and-a-bit, especially when I was living away from home. The first three months were definitely the hardest in adjusting to not living off of my mum's money and living off of my own money, financing transport and everything, the daily costs - which were quite difficult to manage at the beginning. Just getting used to paying for laundry each time that you did it as well, which can be such a burden! […] I have a little book that I write everything in […] At the end of each month, I check to see how much I've got in each account and how much I have at the beginning of the month, just to compare, just to see what I have in my savings and in terms of how much credit I've spent as well. (Full-time undergraduate student)"

"I used to keep a budget spreadsheet, but this was when I was working full-time, and you had the money left over at the end of the month. You could spend it on other things, but at the moment, I just put in my diary what days things are due and I make sure I have what I need to make those payments, and that's pretty much it. It's just like more of a diary tracking method. (Full-time postgraduate (Masters) student)"

To help them keep to their budgets, students took a number of steps including changing dates or mode of payment to better managing their income and expenditure. For example, students swapped to direct debits to pay as you go, or vice versa, or installed smart meters to track their spending on gas and electricity.

"I recently changed the date that I pay the rent […] I used to pay rent on the 20th of each month, which was always the week before I got paid, which was just a nightmare. Changing that to the 1st of each month - so I'm paying the week that I get paid - has been so helpful. I didn't realise how much of a difference that would make, just all of that money being gone at the start of the month, and then knowing exactly what I have to spend. I think because it's the first time I've had this much of an income I've just got used to spending it willy-nilly and being like, 'Yes, I can do whatever I want.' Then actually when it came to paying rent I was like, 'Oh, I've just blown all my money, that was stupid.' So, yes, doing that has really helped and it means that when I'm getting to the end of the month then I can still see that I've got £200 left in my account. (Full-time postgraduate (PhD) student)"

"I think debt is a big thing that I just don't want to have to deal with […] I've set up my bills to come off when my wage comes in, so I don't even see the money that comes off. It's those little things that kind of help for your financial management. If you don't have the money, you can't miss it. I think maybe if I was in a position with high debt and no way of paying it off, I'd look to get some financial advice, and I do know where to go. There's Citizens Advice and stuff as well that can always help with the little things if it's not specifically debt. (Part-time HNC/HND student)"

Students also found ways to cut back on spending and make their money go further. These included shopping around for deals or cheaper options, and using shopping apps to get discounts and 'freebies' on things like food.

Institutional support to manage finances

Students' awareness of support to help them manage their finances varied. While some students were aware that their college or university offered support, such as budgeting classes, others did not know if this was available at their institution. None of the students who participated in an interview or focus group had accessed support to manage their finances via their institution, primarily because they did not know if it was on offer. One student did explore what support was available but was disappointed to learn that the support did not include advice on how to manage finances if they were already in debt. In the process of learning how to manage their finances, there were students who had accumulated debt, owed either informally to family or friends, or formally through credit cards or missed/late payments to their council or energy suppliers.

"I know they have budgeting classes and things like that, but from what I've seen, it doesn't take into account students who might already be in my position where they have a lot of debt. It's great to talk about budgeting when you're not going straight back into the overdraft the second you get paid, but I think it's great resources for people who are starting out. Maybe they're in their first or second year, they're balancing their job and things like that, I think those resources are fantastic when you're not already in a lot of financial trouble but, yes, for someone in my position, I don't think they're targeted to people like me, if that make sense. (Full-time postgraduate (Masters) student)"

There was a desire among students for more financial management support to be offered by institutions to raise awareness and understanding of both financial management tools and the risks associated with debt. Care experienced and estranged students without parental/guardian support felt that they would particularly benefit from financial management support as they did not have anyone to teach them these skills.

"I feel like it [financial literacy] should definitely be talked about at colleges and universities if necessary, about the risks of getting yourself into debt and maybe a bit more support in the financial sector. I feel like a lot of people aren't aware of the actual risks of taking loans out and stuff because it's just easy-access money. Nobody is thinking, oh, I'm gonnae need to pay that back. Then if you don't pay it back, your credit has bombed. So I feel like there should be a bit more awareness in learning places. (Care experienced student focus group)"

When students discussed how they had learned to manage their finances, students primarily said they had learned from trial and error, from a family member, or other financial management tools.

No financial management tools

There were students who had no particular approaches to managing their finances, they described living within their means or being frugal. The outcome of this approach varied; some saved funds, some broke even and others got into debt each month. As outlined in Chapter 7, there were students who had to rely on borrowing money from friends and family or using commercial credit to meet their monthly expenses.

8.6.2. Factors that helped financial management

Students reported a number of factors that helped them with financial management.

As outlined above, being aware of and having access to a range of financial management tools helped students manage their money. In addition, non-repayable financial support from the government and institutions via bursaries, scholarships, free bus travel and student discounts also helped students manage their finances as it increased their overall income without the need for repayment. This was facilitated in some instances by institutions that offered help to students by identifying what financial support they were entitled to and/or helping them to complete application forms. Another way in which government helped students manage their finances was by giving postgraduate students the option to receive their stipend over 12 months instead of just during the academic year.

"Being able to use your student card for bus and stuff like that, that's quite helpful. (Full-time postgraduate (Masters) estranged student)"

Being able to build up savings, both during and out with term time by working, also helped students manage their finances as it provided some students with a financial buffer for unexpected expenses.

"I worked from March up until the middle of - probably until the end of August, and I knew that from the end of August until the end of February, I would have enough money to be able to do my placement, do my essays, finish my whatever I needed to. (FE student focus group)"

Finally, being able to share the payment of expense with others such as a partner, flatmate(s) or family made it easier for students to meet their expenses.

8.6.3. Factors that made managing finances more difficult

There were a number of factors that students reported made managing their finances more difficult. The most commonly mentioned challenge was the cost of living crisis. While the price of food, utilities and petrol had increased, student funding and other sources of income had not risen at the same rate. Even students who could cover their expenses expressed concern due to rising costs.

Unexpected costs also made financial management more difficult for students. As previously described, students often had to manage their finances carefully to ensure they could meet their expenses as their income was limited. Therefore any unexpected cost, including course costs, could quickly put students into debt or unable to meet all their bills because they did not have savings or a financial buffer to deal with these expenses.

Students also found managing their finances more difficult at certain times. For example, students who relied on paid work as an income found it harder to manage their finances when they had course deadlines or placements because they had less capacity to work to bring in income. Some students also reported not having sufficient time to cook and shop around for food, and so paying more on food as a consequence. There were also students who struggled to manage their finances during the summer when student income often stopped or at times when they faced greater expenses, such as school holidays for student parents.

"Utility bills are rising, the energy bills, more especially if you've got kids at home. You cannot let them - you need to heat the house for them - you can't expose kids to cold just because you want to save money. So those are the, we have no choice on that one. (Full-time postgraduate (PhD) student parent)"

Finally, students found it more challenging to manage their finances when they had no experience of doing so. For some students, this was because they had previously had all their expenses paid for by their family, while others were never taught financial management skills.