By Lily Hatch
On Wednesday the 30th of October 2024, Chancellor of the Exchequer, Rachel Reeves, presented her new budget to parliament. In doing so, presenting the reality of a new Labour government; leaving many to ask the question, how will this affect me? The new budget has created high levels of anxiety throughout the nation, alongside confusion and frustrations among many within society ranging from pensioners, to students. Many of the new economic policies will have a direct effect on students within higher level education and as such, this article will act as a guide to explain exactly how it will affect you.
The main aspects of the budget that will affect students are: the increase in tuition loans (and how this has come about as a result of the increase employers pay in national insurance), the raise in minimum bus fares and the raise in minimum wage for 18-20 year olds.
Perhaps the most important issue to students is the rise in student loans. Within the budget itself, tuition loans have risen by 3.1%, from £9,250 per annum, to £9,535, effective as of April 2025. However, this is not the only aspect of the budget which could cause concern for students regarding tuition loans. The rise in national insurance for employers may be overlooked by students as a factor which will directly affect them, however it may arguably be the most crucial. The rise in national insurance that employers must pay for their employees will put significant financial pressure on universities. Whilst research funding may be secured, the financial strain which will come as a result of having to pay more for employees, will prove to be a significant burden. As a result, this may contribute to the argument that university tuition loans should increase, perhaps as far as to £12,000. Whilst the increase in student loans at this time may only be marginal, as pressure on the institution increases, it is probable that tuition fees will rise in tandem.
Furthermore, television financial expert Martin Lewis, in his letter to the chancellor following the announcement of her budget, pointed out, “your government only uprated student maintenance loans in England by 2.8%, while inflation was running at double digits. There is an inconsistency here: the student maintenance loan is a seemingly arbitrary figure, yet the interest on student loans is pegged to inflation.” Meaning, perhaps the budget does not do enough to compensate for the increase on what students will have to pay in cost of living.
Moreover, the Chancellor's budget has proclaimed that minimum bus fares are to rise from £2, to £3 (with some exceptions to areas such as London and Manchester). For the majority of students, buses are the main mode of transport, especially for those in their second and third years who, for the most part, do not live on campus. With the current minimum fare of £2, students are spending at least £4 a day to commute to and from their universities, often times more if they must take more than two trips in a day. It is far more cost efficient to ride the bus than pay the prices of parking or petrol to use a car - and cost efficiency is a core aspect of any student lifestyle. The confederation of Passenger Transport stated that,” An increase to £3 will present many challenges for many passengers, particularly those who rely on buses as their primary means of affordable travel.” Warning the public of what may be a period of tough times ahead.
However, it isn’t all bad news, with many students working part-time jobs, the increase in minimum wage from £8.60 to £10 may provide a little consolation for the financial fears that many students may be feeling following the new budget. Many would argue the budget has fairly raised the minimum wage rate in accordance with inflation rates, as the 16% increase relatively correlates with the inflation rate in the last 12 months. Furthermore, in regard to inflation itself, perhaps it is due to the new budget that inflation has very recently dropped from 5% to 4.75%, a new record low.
To conclude, whilst there have been efforts to make amends through aspects such as the increase in minimum wage – the new budget may create a frightening new reality for students, who already have to stretch their wallets, as they take hit after hit economically speaking. With expenses ranging from accommodation, to upheaved bus fares, to paying back higher tuition loans even once our education is done, the new budget presents a whole host of new concerns for those within higher education.
Image: Douglas Edric Stanley
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