Rent and inflation increases hurt students

by Kim O'Donnell & Iwona Kadluczka

Students are paying 22 per cent more for their accommodation this year than in 2006 to 2007, according to a new survey of providers carried out by the National Union of Students (NUS) and Unipol Student Homes.

An investigation of 132 university and private sector landlords found the average weekly room cost had risen from £81.18 in 2006-07 to £98.99 in 2009-10. London students in comparison pay an average of £151 a week for accommodation. UAL, working either alone or in partnership with a private provider offer 13 halls of residence. The average weekly rent is £136, with the rent ranging from £83 a week to £150 a week.

Wes Streeting, NUS President said: "Students are already graduating with tens of thousands of pounds of debt, and soaring accommodation costs will only make the situation worse. With graduate job prospects at an all time low, things are looking very bleak for many students."

Housing providers counter that the increase can be explained by students’ preference for more luxurious accommodation.

However, there is a concern that a lack of budget accommodation may price poorer students out of higher education. The survey indicated that one in three working class students lived at home while at college, whereas only one in five from a middle class background did.

If that wasn’t enough, nearly four  million graduates might face a rise in their student loan repayments this year due to an unexpected surge in inflation.

Official figures published this month by the Office for National Statistics showed that inflation Retail Prices Index (RPI) jumped to an 18-month high of 4.4 per cent. Depending on where they are studying, university students can borrow up to a maximum of £10,153 a year, leaving them with over £30,000 of debt over three years. 

The new figures could mean that loans taken after 1998 are charged at 1.5 per cent interest. Despite this, experts have said that student loans remain one of the cheapest borrowings for young people. Martin Lewis, from consumer website MoneySavingExpert.com advises: “Student loans are still the cheapest long-term debt you'll ever get, so repaying only to then borrow at a higher rate for a mortgage or other loan doesn't make sense.” Nevertheless, the financial future for students looks bleak.