Our student loans system is no joke

An Englishman, a Northern Irishman and a Scotsman walk into a student bar. They are all on the same course, living in the same student halls and from the same economic background.

In this gag, it is the Englishman who is the butt of the joke. He gets a £4,767 loan to help with his student living costs, while the Northern Irishman gets £5,084 and the Scottish one gets £8,400. All come from households with incomes above £63,000 and none of them is studying in London.

If a Welshman walks in, all three will be weeping into their pints because students from Wales get a loan of £11,150 plus a grant of £1,000 that they never have to pay back. That’s about £140 a week more than the Englishman.

What a mess our student finance system is, loaded with inconsistencies and outdated rules. It’s no joke really.

• Sunday Times Good University Guide

How much a student gets and whether it is just a loan or a mix of a loan and grant depends on where they are from, even though accommodation, food and socialising costs will be the same for students attending the same course at the same university.

In England, Northern Ireland and Wales it also depends on whether they live at home, and those who study in London can get more. And in England, Scotland and Northern Ireland, grants and loans are related to parents’ income.

Most students have turned 18 by the time they attend university. In the eyes of the law they are adults. They can vote, drive, drink and get married. But in the eyes of student loan companies they are still treated as dependants — the more their parents earn, the less the student gets, even though their debts will be their own for the rest of their working lives.

• How much does your child need for university?

The thought is that high-earning parents will chip in, but in England the maintenance loan starts to reduce when total family income is £25,000 a year and at about £60,000 a year it can be halved. The system does not take it into account that many parents might not be able to afford to help out or feel inclined to.

Unlike child benefit, these loans are based on household income. This means that a single parent who moves in with a new partner could also find that their child’s maintenance loan is reduced.

We talk about how fiscal drag (where tax thresholds do not go up with inflation, thus increasing taxes without actually putting up rates) is affecting families. But the effect of frozen maintenance loans is often overlooked.

In England, the £25,000 household income level at which a student qualifies for the maximum support has not changed since 2008. If that threshold had kept pace with inflation, it would be about £35,000. The loan hasn’t kept pace with inflation either — in 2008 the maximum maintenance loan that a student from England living away from home outside London could get was £4,175. If that had gone up with inflation they would now get about £6,600 instead of £4,767.

Interest on student loans, on the other hand, as any graduate will tell you, has more than kept pace with inflation. There’s nothing funny about being a student these days.@JohannaMNoble