Budget 2015: Students - here's the advice you need after Osborne axed university maintenance grants

Going to university for fun and friends could be a 'massive waste of money,' warns leading finance expert

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Following Chancellor George Osborne’s announcement that maintenance grants for poorer students are to be scrapped and replaced with loans from September 2016, students quickly condemned the move as fears rose about whether they would be able to fulfil their ambitions of attending university or not.

The chancellor stood by his decision saying the move will bring greater “fairness” to the higher education funding system and that his decision will save £2.5bn before the next general election.

However, in order to reassure and help those who will be affected by the move, The Independent has sought the advice of leading personal finance expert and editor-in-chief of comparison site, money.co.uk, Hannah Maundrell, to gather what students need to do now if they want to attend college or university post-September 2016:

1) What is your reaction after yesterday’s cuts?

Swapping a grant for a loan is never going to be a good thing; the only real positive is that it helps simplify the bamboozling world of student finance. Cash-strapped, wannabe students shouldn’t let this put them off studying.

Although the cut seems fierce, if you’ve got big career aspirations that require a degree, then footing the extra cash after you start earning is still likely to be worth your while.

2) Where does this leave students?

The onus is now on universities to support students from disadvantaged backgrounds.

If you’re from a low earning household and looking at your options, then make financial support as important as course structure when you’re deciding which university deserves your tuition fee.

Don’t let the switch from grants to loans put you off studying; as things stand, you won’t feel the financial hit until you start earning a reasonable amount and you’ll only feel the full force of the cut if you can afford to pay back your loan in full before the 30-year limit is up.

If you’re a student that gets the maintenance grant now – or are starting in September – then you don’t need to worry: as long as your situation doesn’t change, you will still be entitled to the same support you get now; it’s only new students that will be affected.

3) What do students have to do now?

University isn’t a ‘no brainer’: you do have options and they are definitely worth considering.

Take this change as reason to think twice about whether studying for a degree is right for you – even if you won’t be dramatically affected by the cut. There are other avenues into highly successful careers and getting training that translates into real world experience via an apprenticeship could be a better option.

The discrepancy in earnings between graduates and non-graduates is gradually closing (it’s currently around a 45 per cent average) but there’s hope that, with the Government forcing business to take apprenticeships seriously, we could see the difference close further.

If you decide to go to university then take choosing a course and a college seriously: going for three years of fun, friends and frivolity could be a massive waste of money if you don’t come out with a decent degree.

4) How is the future of finance in higher education looking?

In a word: expensive.

Tuition fees look set to increase across the board and future governments could make graduates repay student loans faster, in full and with more interest: we just don’t know.

The Government has already indicated plans to squeeze new grads harder and sooner by freezing the repayment threshold at £21,000 for five years.

Rising costs don’t seem to be a deterrent though. Surprisingly, the number of full time undergraduates has increased, in all but, the first year since £9,000 tuition fees were introduced.

The big question will be how budget-conscious part-time students react as their numbers have already fallen dramatically since higher fees were brought in.