Student Loan And Universal Credit: What Counts As Income?

Universal Credit is a means-tested benefit for people under State Pension age who are on a low income or out of work. It is usually paid monthly and is based on your circumstances during that month. This is called your 'assessment period'. Generally, students cannot claim Universal Credit unless they have children, live with a non-student partner, are disabled, or are young students in non-advanced education with no parental support. If you are a student, your student income, such as loans and grants, can affect how much Universal Credit you get. Loans for maintenance, such as living costs and rent, are regarded as income and are taken into account when calculating your Universal Credit.

Student loans for maintenance count as income

If you are a student in the UK, you may be able to claim Universal Credit, depending on your circumstances. Universal Credit is a means-tested benefit, and your eligibility will depend on your income.

If you are receiving a student loan for maintenance, it will be averaged out across the academic year and divided by the number of assessment periods in your course year. For every £1 you are entitled to get from a maintenance loan, your Universal Credit will be reduced by £1. For each assessment period, the first £110 of your income is ignored.

If you are a final-year student, the calculation will be until your course end date. No student income will be taken off your Universal Credit if the assessment period covers the first day of the summer holidays, if you are on summer holiday for the whole of a subsequent assessment period, or if your course ends during the assessment period.

Student grants for maintenance count as income

If you are a full-time student in the UK, you may be able to get a non-repayable grant to help with accommodation and other living costs. These grants are called the 'Maintenance Grant' and 'Special Support Grant'.

The Special Support Grant is meant for students who get or qualify for income-related Employment and Support Allowance or the housing element of Universal Credit. You may also get the Special Support Grant if, for example, you're a lone parent or have certain disabilities.

The Maintenance Grant and Special Support Grant are paid into your bank account at the start of each term at the same time as any Maintenance Loan. The amount of help you can get through the Maintenance Grant and Special Support Grant is the same. If you get the Maintenance Grant, some of it is paid instead of the Maintenance Loan.

The Special Support Grant will not be counted as income when working out if you’re entitled to income-related benefits or tax credits. However, if you get a grant and a loan and your grant is paid for the same period, it is completely disregarded unless it is for the maintenance of someone who is part of your Universal Credit claim or for rent payments that are met by Universal Credit.

If you get Universal Credit and are eligible for a student loan, your student grant will be taken into account for specific amounts which cover the maintenance costs of another person included in your Universal Credit award.

If you get Universal Credit and are not eligible for a student loan, the following student grants will not be included in the calculation:

• Tuition and examination fees
• Expenses for residential study away from an educational establishment
• Living away from your usual place of study
• Maintenance of a dependent adult (if the Universal Credit award does not include an amount for this person)

Postgraduate student loans are treated differently

Postgraduate Master's and Doctoral Loans are paid in three instalments over each year of the course and are intended to cover both living costs and tuition fees. When calculating Universal Credit, only 30% of the loan is taken into account as student income. The remaining 70% is ignored.

If you fail to apply for the maximum postgraduate loan you're entitled to, your Universal Credit will usually be calculated as if you received the full loan amount. This means that 30% of the maximum loan will be considered as income.

Hassan gets Universal Credit and is pursuing a full-time postgraduate master's degree starting on 12 September 2024. His Universal Credit assessment periods run from 8 September 2024 to 7 May 2025. The course will last for one year, and he receives a postgraduate master's degree loan of £10,000.

Step 1: Calculate 30% of the postgraduate loan. In this case, it would be £10,000 x 0.30 = £3,000.

Step 2: Determine how many assessment periods the loan will cover during the year of study. In Hassan's case, the loan will count as income for seven assessment periods.

Step 3: Divide the amount from Step 1 by the number of assessment periods from Step 2. So, £3,000 divided by 7 equals £428.6.

Hassan's Universal Credit will be calculated based on an income of £428.6 per month from September 2024 to April 2025.

It is important to note that the Department for Work and Pensions (DWP) may not provide detailed information on how your student income is calculated, and mistakes can occur. If you are receiving student income and Universal Credit, it is recommended to seek advice from an adviser to ensure accurate calculations.

Special Support Loans do not count as income

Special Support Loans are available to students who receive or qualify for income-related Employment and Support Allowance or the housing element of Universal Credit. They are also available to students who are lone parents or have certain disabilities.

If you receive a Special Support Loan, it will not be deducted from your Universal Credit. This means that your Universal Credit payments will not be reduced as a result of receiving a Special Support Loan.

It is important to note that other types of student income, such as maintenance loans and grants, are considered when calculating your Universal Credit. The maximum amount of student maintenance loan you are eligible for will be taken into account, even if you decide not to take out the full loan or receive a reduced loan due to other sources of income.

When calculating the impact of student income on your Universal Credit, you can follow these steps:

• Calculate your total student income, excluding disregarded grants.
• Average out your student maintenance loan over the academic year by dividing it by the number of months the loan will cover.
• Divide the amount from Step 1 by the amount from Step 2.
• Subtract £110 from the result of Step 3 to determine how much will be deducted from your Universal Credit due to student income.

It is worth noting that if you are receiving regular payments of a grant, it will not be counted as income and will not reduce your means-tested benefits. However, if you receive a one-off payment of a grant, it will count as capital rather than income, and this may affect your means-tested benefits.

Student income is calculated differently in different parts of the UK

In Northern Ireland, if you are eligible for the Nursing and Midwifery Student Bursary, you will have the following elements of the bursary taken into account as income:

• Non-means-tested bursary
• Dependant's Allowances

The following elements of the bursary should be disregarded:

• Registered Childcare Costs
• Parent Learning Allowance
• Clinical Placement Expenses

In Wales, there are two statutory funding streams for students studying Nursing and Midwifery:

• Standard Student Package: Includes a loan, grant, and means-tested bursary.
• Student Maintenance Loan: If you are eligible, it counts as income. The maximum loan you could be entitled to is taken into account, even if you decide not to take out the loan or if it is reduced due to household income.

In Scotland, if you are eligible for the Nursing and Midwifery Student Bursary, you will have the following maintenance elements of the bursary taken into account as income:

• Non-means-tested bursary
• Spouse or Cohabiting Partner Allowance
• Child Dependent Allowance

The following elements of the bursary should be disregarded:

• Initial Expenses Allowance
• Registered Childcare Costs
• Lone Parent Childcare Grant

Additionally, the extra costs of residential study away from your usual place of study during term time should also be disregarded.

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