Last week, demonstrations at universities and colleges across Scotland were aimed at highlighting these problems in the run up to the festive period, with student associations warning of a widening gap between student finances and the cost of living.

Meanwhile, figures from the Scottish Centre for Employment Research (SCER) suggest that the current financial climate has put students and the newly unemployed on a collision course.

Research into student finances from the centre, which is based at Strathclyde University, has revealed that the average final-year student has debts of about £7800. Excluding the minority who have no debt at all, the average for those who remain is £8750.

The study found students responding by taking up part-time jobs with most now working far in excess of the 10 hours per week recommended by the Cubie report in 1999.

However, competition for jobs looks set to become intense, according to Chris Warhurst, director of SCER. “Not only is the recession creating higher unemployment among the general working population, it is also squeezing employment opportunities for students,” he says.

New Government initiatives to help the unemployed back into work may lead to competition in the jobs market and a rise in student debt, Mr Warhurst adds.

Contradicting the stereotype about frivolous student spending on drinking and partying, most student expenditure relates to housing and living costs, according to SCER figures.

The report found that students from working-class backgrounds have higher debt than those from middle-class families. Although many students accept that debt is now an inevitable outcome of studying, it remained a great concern for those who participated in the research.

“Many students work in hospitality and retail – sectors whose busiest time is over Christmas – and employers ask students to increase their hours,” explains Jo Commander, one of the report’s authors. “Students then struggle to juggle work and study, especially with the first exams coming early in the new year. But not working the hours risks losing the job and increasing debt.”

This could be a problem for the Government which wants to widen access to higher education. Fear of debt can be a major disincentive to studying at university for young people from working-class backgrounds.

Researchers also warn that Government policies on employment may exacerbate the situation. Students may find themselves being squeezed out of the workplace as employers are encouraged by the Government to recruit through the New Deal. The Government is offering financial incentives to employers to encourage them to offer jobs to the unemployed.

As Chamber of Commerce data reveals, service jobs have been hit hardest in Scotland recently, it is these industries and their call centre and restaurant jobs that often provide the easy to get and easy to quit jobs that are so useful to students supporting themselves through their studies.

There are fears that the package of grants and weekly bonuses may persuade employers to oust students in favour of the Welfare to Work strategy. The same jobs that are useful to students also provide entry-level opportunities for other young people just starting their working lives.

As Stirling University economist David Bell points out, young workers are more sensitive to business cycles than older workers and the effects can be long-

lasting. Examining rising unemployment in the UK with colleague and former Monetary Policy Committee member Danny Blanchflower, he claims, “Unemployment for the young causes permanent scars rather than temporary blemishes. It increases chances of being unemployed in later life and induces lower earning potential.”

In Mind the Gap, a report out last week, NUS Scotland published results of a survey of freshers who began their studies in the autumn. It claimed that while the majority of this year’s first-year students had given thought to their finances prior to Freshers’ Week, three-quarters now realised they had grossly underestimated their living expenses. Almost 70% said they will take up paid employment if money gets tight. Less than one-third of first-year students expected to use commercial debt such as overdrafts and credit cards.

Liam Burns, NUS Scotland president, said: “In the current economic climate, many of the traditional safety nets students have relied on have been ripped away. Students have been sold the false hope of adequate student support. Many have underestimated how much they

will have to spend to stay in education, wrongly guessed that debt is something they can avoid and think they can turn to alternative sources of cash which we know are rapidly becoming harder to secure.

“Better information about the realities they are likely to face may well serve to close the door to the very students we want to encourage into education. The Government cannot be blamed for the current funding system, but they certainly will be if we continue to stick our heads in the sand and pretend the problem doesn’t exist.”

It’s a tricky situation for the Government, which wants to encourage more students into higher education but also help unemployed young workers. These competing interests may need to be balanced if Scotland is to have a thriving economy again.