Accommodation deposits harm students

Alastair Thompson

August 24, 2020

There is much to be proud of when it comes to the United Kingdom’s system of Further Education and its institutions. Nonetheless, I wish here to raise one issue which is significant. Prior to attending university, students are expected to have access to levels of cash which can quite easily exceed thousands of pounds, simply to make a deposit so they can rent accommodation.

The United Kingdom has already lost 730,000 jobs throughout the pandemic and real wages are falling. It is crucial that families have access to all the financial help they may require to avoid a similar fate throughout this crisis. This may necessitate the need to draw on their own savings.

Amidst this, we are demanding that students hand over what can exceed £1,000 just for a deposit on a rental property to finish their education. When many students attending university have never even worked. Even for those who have, it is almost certain they could not acquire these levels of savings alone. Meanwhile the current system already leads to some students needing to work just to cover their basic rent and food costs whilst at university, never mind them being able to acquire savings.

I am a meritocrat. I believe that those most deserving should succeed. Yet for the most deserving to fulfil their potential, we need equal levels of access to opportunities. This is not the case if the system relies upon the concept that individuals need to hold a certain level of wealth before even setting foot through a university’s front door. Take one example from my own university: the University of Bath. Bath is an expensive city to live in, so much so that one girl found herself £7 away from reaching the limit of her £1,500 overdraft – just after making her deposit alone.

It does not need to be this way. Change can come without harming landlords or pushing rents up due to additional risk. We need to rethink what the objective of a rental deposit is. From doing so, some fairly obvious solutions arise. I wish to put forward the case for two alternative systems. Both of these systems have their own benefits and drawbacks, yet both seem far superior to the current system.

One proposal is that the government could adopt a system modelled on student-loans. As rental deposits are to all extents a shift of cash on balance sheets, a system can be implemented where the state takes on this role. The only apparent cost under this system would arise when students fail to regain their deposits, as the state has guaranteed this cash. However, the legal power of the state can ensure this is regained with ease via a fine or tax. Essentially, the students who break their contracts would still pay the price, yet those who did not would not need to put forward the huge sums of money which the poorest might not be able to do.

Another advocates for much less government involvement, but may equally improve the system. An alternative system could make the university a guarantor of its students by collecting together a bundle of small payments from each student to create a fund. From this fund, landlords could then be repaid for damage to their properties, and then the students responsible for harm would have to repay the fund for the level of harm they caused, and the others reimbursed. This would have the benefit of reducing payments for deposits to a fraction of the current level, yet ensuring students still feel personal responsibility from the outset of renting, even if such an original fee paid to the fund was small.

The idea that parents might be forced to go as far as to borrow to fund their child’s education is grossly inefficient and costly. All these issues are only going to become more pertinent as all find their financial positions worsening from this recession. I hope politicians take note of this issue soon, or the harms caused by this system might rapidly increase.

Author

Written by Alastair Thompson

Alastair Thompson is a Conservative political commentator.

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