Soaring energy bills, rising food prices and the threat of a recession: the “class of 2022” has graduated into the worst cost of living crisis for decades.
Not that things have been easy for young adults for a while. Shreya Nanda, an economist with the Institute for Public Policy Research’s Centre for Economic Justice, says they have faced their own crisis “for many years – in terms of stagnant wages, rents going up, high marginal tax rates faced by young people and their state spending being cut”.
During the last few weeks, university graduation ceremonies have been taking place up and down Britain, with some scheduled for this month or later in the year.
With student loan repayment thresholds shifting, job insecurity and rising rents, those who have finished their studies and celebrated their achievements with family and friends now have some difficult decisions to make.
For example, for many graduates, the case for travelling after university is compelling, with adventure and freedom providing a respite from the past three years of academic work. Yet for many young people, financial concerns have cast a cloud over their dreams of travelling the world.
We spoke to four new graduates about what the cost of living crisis means for their next steps.
Rachel Boani, 21
Boani, who studied geology and physical geography at the University of Edinburgh, says the cost of living crisis was definitely a factor in her deciding to take a job after graduating rather than travelling or going on holiday.
She adds: “A massive worry was that [going on holiday] meant taking time out of work, and I’m conscious of not having a massive amount of money saved away at this point … I would have loved to have gone travelling over the summer but being able to save over the last year while paying rent and bills and food has been impossible.”
Over the last year, Boani has spent a greater proportion of her savings than in any other as a result of the current crisis.
The cost of graduation – robes, tickets and so on – varies across the UK. “Fortunately, my parents chipped in to contribute to the cost of hiring a gown for my graduation. But the cost of hotels, going out for a celebratory meal and all the added costs was definitely discussed among my friends and family,” Boani says. “Lots of people were annoyed with the cost of graduation and felt that universities offered no help towards these costs.”
When she initially spoke to Guardian Money, she had been waiting to hear if she had been accepted on a graduate scheme with the organisation upReach to be a mentor for disadvantaged students across the UK. She later found out that she had.
Boani went back home after university but is now in the process of trying to find an affordable place in Manchester.
Speaking before she accepted the offer from upReach, she said: “University gave me the independence to move out, and it feels as if I’m moving backwards by going home … When looking to stay in Edinburgh, I realised I couldn’t afford rent prices there – on top of rising bills and council tax.
“I would love the opportunity to move to London to begin a career but I would have to live at my family home for at least a year, maybe two, to save enough to move down there.”
Boani, who doesn’t receive financial support from her family, typically balanced two or three jobs over the summer to fund her finances at university. “Even with my £7,000-plus maintenance loan [the maximum amount because of her parents’ lower income], it doesn’t cover rent, food and bills,” she says.
Hannah Munden, 22
While graduation typically signifies new beginnings, Munden, who studied business management at the University of Sussex, has moved back into her parents’ house in Brighton.
She has found a job in marketing management, although hybrid working means she does not need to go into the office very often.
“I don’t really want to be living with my parents,” she says. “I’ve enjoyed the freedom of university and want that independence when I move out as well. But I’m also battling the difference between wanting that freedom, wanting to move out and rising prices.”
The rental market in London is competitive – it’s “£800-plus for a good place”, she says, “with bills on top of that”.
Munden is finding the rise in utility costs particularly worrying: “I feel like it’s more money I’ll no longer be able to spend as someone who’s just got their first full-time job and finding their feet.”
Then there’s the interest rates on student loan repayments.
“I know I’m only 22 but it makes me worry for future generations, and even people like my kids – if they want to go to university, even though there are alternatives, will they be able to with rising costs?”
Deyna Grimshaw, 21
Grimshaw, a final-year English literature student at the University of Birmingham, was also due to move back home after university.
She says she is unsure what to do next but is reluctant to take a master’s. “Full-time education isn’t something I want to continue any further,” she says, citing its cost and stress. “I’ve been applying for jobs around my home town at the moment – any industry which I’m even slightly interested in – to make sure I’ve got something to do over the summer.”
The cost of renting is at the forefront of Grimshaw’s mind. “I’d definitely say the cost of living crisis has made me more inclined to stay at home for longer,” she says. “As much as I’d love to move out and live with friends, I don’t know how I’d be able to justify paying £1,000 a month, especially seeing as I probably won’t be in a very high-paid job.”
With UK grocery prices having soared, she says: “I’ve found I’m spending a lot more on food than I was a few months ago, even though I’m buying the same things or less.
“To be honest, I don’t think the university experience I’ve had is worth the debt I’ve built up.”
She has accrued almost £30,000 in maintenance loan “debt”, which, when coupled with course fees, means she owes about £60,000. She worries about whether the debt will “pay off” in terms of her job.
Aravindh Suresh, 21
Having applied to numerous firms before landing a summer internship last year, Suresh, a final-year economics student at the London School of Economics and Political Science, is embarking on a graduate role at a firm within the financial industry.
After graduating, Suresh intends to live in central London. “We’ve had to take the potential increased costs into account when looking for new properties to rent,” he says. Suresh and his flatmates were struggling to find anything for less than £900 a person a month.
“I’m fortunate that my graduate job pays well,” says Suresh, who will work as an analyst. “So while the cost of living crisis will definitely reduce my disposable income post-expenses, I’m unlikely to be in a position where I’ll be struggling to pay the bills every month.”
However, Suresh says rising interest rates on his student loans are a concern, and that this has made him eager to pay off his debt as fast as possible. “It’ll likely mean slightly postponing my ambitions to get on the housing ladder, since I’ll only look to save up for my housing deposit once I’ve paid off most of my student debt.”
While Suresh is happy about his university experience, he says: “Several financial firms have started offering internships where I could have worked and learned at the same time.
“Had these opportunities been as widely available when I was applying to university, I could very well have chosen this option instead.
“I would be in a lot less debt and would probably have reached the same career path as I am on now, albeit over a longer timeframe.”
What do the experts say?
Tom Allingham, the head of editorial at the website Save the Student, advises looking into the best graduate bank accounts. A graduate account will extend your interest-free overdraft beyond your time as a student and give you a few more years to get out of debt without facing any charges. “It’s best to switch while you’re still a student because some accounts don’t allow you to do so if you’ve already graduated,” Allingham says.
“We’d also urge graduates not to panic about the size of their student loan debt.”
This is echoed by Ben Waltmann of the Institute for Fiscal Studies, who says “recent changes to the student loans system [act] as a tax rise. Under the current student loans system in England, remaining loan balances are wiped 30 years after students first become eligible for repayment.”
He says: “While the student loan balance does not matter for most graduates under the current system, what’s really important is how much graduates have to repay each year.”