Student loans and Universal Credit: letter to UK Government

Letter from Social Justice Secretary Shirley-Anne Somerville to Viscount Younger of Leckie, urging the Department for Work and Pensions to stop treating student loans as income for benefit purposes.

From: Cabinet Secretary for Social Justice Shirley-Anne Somerville MSP
To: The Viscount Younger of Leckie
Parliamentary Under-Secretary of State
Department for Work and Pensions


Dear James,
As mentioned at our recent Joint Ministerial Working Group Forum, I would like to highlight an issue that the Poverty and Inequality Commission brought to my attention, regarding the treatment of student loans as income for Universal Credit.
You will be aware that there are certain conditions which allow someone to study and claim Universal Credit, for example people with responsibility for a child, and disabled people.
It has been widely reported that the rising cost of living has put pressure on much of the population. Students, who often have a low income due to having less time to undertake paid work, have been particularly affected. A recent briefing from the House of Commons Library1 highlighted studies by Save the Student and the National Union of Students. These studies found that 64% of students are struggling to pay rent and that 18% had to use foodbanks. They also found that over a quarter of those surveyed had less than £50 a month to live on after paying rent and bills. Unfortunately these struggles have disproportionately affected marginalised and under-participating groups of students including disabled students, black and minority ethnic students, students from lower socio-economic backgrounds, care leavers, and students who are estranged from their families
It is clear that more could be done to support students in this situation who are striving to improve their long-term job prospects by seeking further and higher education.
A step towards achieving this and providing more support would be to disregard student maintenance loans as income for the purposes of calculating Universal Credit awards. Student maintenance loans are just that - loans which are to be repaid rather than income which is to be kept.
As you will be aware, the Scottish Government has introduced the Special Support Loan for students as part of our commitment to doing what we can to help people work towards positive outcomes in their lives, and I welcome the DWP’s decision to disregard this Special Support Loan as income for benefit purposes.
However, more can be done for those who are eligible for Universal Credit while studying, and I urge you to disregard their maintenance loans as income as well. This could introduce a real positive change for disabled students and student parents and would very much support your back to work agenda by improving their long term job prospects. For these students, successfully navigating academia can only increase their prospects when they are able to move into the labour market. Disregarding the maintenance loans would lessen the impact that increasing living costs are having, giving these vulnerable students a much higher chance of completing their studies successfully and able to make the move away from reliance on social security.
I look forward to your response.
Yours sincerely

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