Finance management during a studentship can be a real problem for many people because they must pay for tuition, accommodation, and other expenses. Knowing how student loans and grants work is essential to a student on Universal Credit.

It is essential to understand that Universal Credit is a means-tested benefit, which implies that it depends on the amount of income and the client’s situation.

This guide will tell you all you need to know about the link between student income and Universal Credit.

What is Universal Credit?

Universal Credit is another state benefit in the United Kingdom for people with low earnings or no job. It assists in meeting living expenses, including rent.

Unlike other benefits, UC consolidates various forms of benefits into a single lump sum, making it easier to deal with.

If you are a student, you can claim Universal Credit under certain conditions, for example, if you are a single parent, have a disability, are studying and looking for a job, or are studying fewer than 16 hours per week.

However, the amount you can get depends on your student income, including income from work and maintenance loan.

How Do Student Loans Affect Universal Credit?

Student loans, particularly maintenance loans, are classified as Universal Credit income. Here’s how they impact your payments:

Maintenance Loans

1. Any part of your maintenance loan for living expenses is considered when determining Universal Credit.
2. The Department for Work and Pensions (DWP) then cuts the total loan amount by the number of assessment periods in the academic year. It is then considered monthly income, and the next step is to find out the average or mean.
3. A portion of £110 per month is cut out from your maintenance loan for travel or study expenses.

Tuition Fee Loans

Example:
If your maintenance loan for the year is £9,000 and your academic year spans nine months, the DWP will calculate your monthly income as follows:

£9,000 ÷ 9 months = £1,000
£1,000 – £110 (disregarded amount) = £890 monthly income

This amount will reduce your Universal Credit payments during those months.

How do Grants and Bursaries impact Universal Credit?

Some grants and bursaries are part of income for Universal Credit. These include:

• Maintenance Loan: A loan for living costs count as income which affects your Universal Credit payment.
• Special Support Grant: Universal Credit excludes the Special Support Grant from its calculations, unlike maintenance grants. This grant is for studying expenses like books, travelling, etc., and it does not affect your benefits.

• NHS Bursaries: If you are awarded an NHS bursary, only the amount for the cost of living is considered. Universal Credit excludes other elements, such as tuition fees and childcare payments.

  

Postgraduate Loans and Universal Credit

Postgraduate loans for master’s or doctoral studies are different:

• For Universal Credit, 30% of the total postgraduate loan is regarded as income.
• The remaining 70% is ignored to ensure that only a part of the loan affects the benefit payments.
• This calculation offers at least some help to postgraduate learners who use Universal Credit to cover their living expenses.

Reporting Changes to the DWP

If you’re receiving Universal Credit, reporting any changes in your student income to the DWP is crucial. This includes:

• The amount of your maintenance loan or grants.
• The start and end dates of your course.
• Any additional bursaries or scholarships?

Failing to report changes can result in overpayments, which you may need to repay, or underpayments, leaving you short of the financial support you can get.

Tips for Managing Universal Credit as a Student

• Plan Your Budget:

Spend the money that comes with the maintenance loan and Universal Credit judiciously. The first and foremost priority should be rent, utilities, and the basic needs to maintain a stable income.

• Understand Your Entitlements:

Familiarize yourself with the rules around Universal Credit and students. Visit GOV—UK Universal Credit and Students Guide for official information.

• Keep Track of Assessment Periods:

It is also essential to know when your student income is in use, so that you can manage the money well during a particular month.

• Seek Additional Support:

Other sources of income include university hardship funds, scholarships or part-time jobs.

• Communicate with the DWP:

Report any changes in your situation to the DWP to ensure you receive the correct amount of Universal Credit.

Final Thoughts

Understanding how Universal Credit and students interact is essential for managing your finances while pursuing your education.

While student loans will decrease your Universal Credit entitlement, some successful strategies are: plan, budget, and search.

If you need assistance understanding how to navigate this process, Enrollmate is here to make things easier.

Our team offers guidance on how Student Loans work, while taking care of the enrolment process for you, everything for free.