Universities will be given an additional £15 million in funding this year to help ease cost-of-living pressures for disadvantaged students.
Tuition fees for degrees in England will be frozen at a maximum level of £9,250 for the next two years and maximum student loans for living costs will rise by 2.8% in 2023/24, the Department for Education (DfE) has said.
But leaders across the university sector, as well as the Institute for Fiscal Studies (IFS), have said some students will still be left £1,500 a year worse off.
The announcement from the DfE comes after university leaders had warned that students could abandon their degree courses unless “immediate action” was taken to offset the cost of living.
Robert Halfon, minister for skills, apprenticeships and higher education, said: “The Government recognises the additional cost-of-living pressures that have arisen this year and that have impacted students.”
In a written ministerial statement on Wednesday, Mr Halfon added: “Today we are making a one-off reallocation of funding so we can add £15 million to this year’s student premium, enabling extra hardship awards to be made to tens of thousands of disadvantaged students.
“This extra funding will complement the help universities are providing through their own, bursary, scholarship and hardship support schemes.”
Mr Halfon said the maximum level of tuition fees would be frozen for 2023/24 and 2024/25 “to keep the cost of higher education down”.
Dr Tim Bradshaw, chief executive of the Russell Group, which represents some of the most selective institutions in the UK, welcomed the extra hardship funding, but said additional assistance was “urgently needed”.
He said: “Without it, we are concerned this will have an increasing impact on students’ studies and wider mental health and wellbeing.”
Dr Bradshaw added: “It is disappointing that the DfE has failed to deliver a meaningful increase to maintenance loans or take the opportunity to address some of the flaws in the forecasting process to ensure they keep up with rising costs, despite warnings that students would be left £1,500 worse off next year.
“Reversing the real terms cut in the value of the loan since 2020/21 would be a simple fix that would provide much needed immediate support for living costs and would be paid back by the student.”
Ben Waltmann, senior research economist at the IFS, said: “The most important part of today’s announcement is that the Government has allowed the large cuts to student support since 2020/21 to become baked in.
“This means that merely due to inflation being higher than forecast, students from the poorest families will be entitled to £1,500 a year less in maintenance loans than if inflation forecasts had been correct.”
Vivienne Stern, chief executive of Universities UK, called for a “national conversation on how universities are funded” after the announcement that tuition fees will be frozen.
On the plans to raise the maintenance loan, Ms Stern said: “Although it’s an increase, it does not make up for the real-terms cut to maintenance that students have experienced since inflation began to rapidly increase.
“We need to look more closely at how well the current system is supporting students and what changes need to be made – currently the student maintenance package in England is at its lowest value in seven years.”
Chloe Field, vice president for higher education at the National Union of Students (NUS), said: “The 2.8% increase in the maintenance loan for 2023/24 is woefully inadequate and will leave students over £1,500 worse off than they would have been if student support was tied to inflation.
“If maintenance support continues to lag behind inflation, the number of students in poverty is only going to increase.”
On the additional funding from the Government, Ms Field added: “It’s vital that these funds are made accessible to as many students as soon as possible.
“Ultimately, hardship funds are a quick fix to a long-term problem which has come to a head in the cost-of-living crisis.”