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Money Matters

Universal Credit - what it means for students

The introduction of Universal Credit is the biggest change to our welfare benefits system in over sixty years - affecting millions of people with children or on a low income. It is steadily being rolled out across the country and replacing most of the current benefits and tax credits systems. We have put together this guide to help you understand how Universal Credit affects students.

Firstly we explore what Universal Credit is and how it differs from the benefits system it replaces. Then we look more specifically at how it affects students - including some 'real-world' case studies to show how Universal Credit would be calculated in different circumstances.

What is Universal Credit, and which 'legacy' benefits does it replace?

Universal Credit is the new benefit system that replaces several benefits, including:

  • Income Based Jobseeker’s Allowance;
  • Income Related Employment and Support Allowance;
  • Income Support;
  • Housing Benefit and
  • Tax Credits.

These benefits are often referred to as 'legacy benefits', as they are the outgoing benefit system - now being replaced by Universal Credit.

Universal Credit has now been introduced throughout the country, meaning that it is not possible to make a new claim for the above-mentioned benefits. Therefore, new benefit claimants will need to apply for Universal Credit.

Please note - Universal Credit will not replace DLA/PIP, Contribution Based Jobseeker’s Allowance and Contribution Based Employment and Support Allowance. Therefore it is still possible to make a new claim for those particular benefits, if you qualify.

 

Who can apply for Universal Credit?

Full-time students can only qualify for Universal Credit if at least one of the following circumstances applies:

  • You have a dependent child
  • You have limited capability for work AND are in receipt of DLA/PIP
  • You have a non-student partner. Your partner makes the claim which includes you as their student partner.

The above restrictions do not apply to part-time students, but you would need to show that your part-time course is compatible with any work-related requirements that are part of your UC claim. For example, if you are applying for Universal Credit as a job-seeker, DWP may require you to be available for work at certain times during the week as part of your UC claim in order to receive the benefit. 

How does Universal Credit differ from the benefits it replaces?

Universal Credit is one single benefit, which can make it easier to adjust to a change of circumstance e.g. fluctuating income. In other words, if you have a change of circumstances you are only updating one benefit - instead of having to contact a number of different offices to change multiple benefits, which would then have to interact/coordinate with each other.

It is paid monthly, as opposed to weekly or fortnightly. So in that sense it is paid more in line with how most employers would pay you if you are working.

Student income, such as your Maintenance Loan, is also applied differently - meaning that students who already claim legacy benefits (explained above) may find their entitlement is reduced once they move onto Universal Credit.

It is paid to one claimant (payments cannot be split between two claimants in the case of a couple claim), including any assistance towards rent, with some exceptions.

How is Universal Credit calculated?

A claimant’s maximum Universal Credit is calculated using a 'standard allowance' for each adult/couple, plus additional 'elements' for each child, childcare (if you are working), and disabilities. Housing costs can also be included i.e. your rent or, in some cases, support for mortgage interest.

The claimant’s income (excluding some disregards) is then deducted from this to give the amount of Universal Credit awarded.

Therefore the calculation is:
Maximum Universal Credit - Allowable Income = Universal Credit to be paid

Income from a student's Maintenance Loan and certain grants will be included. This is one of the main differences between Universal Credit and the Tax Credits system, where student income is generally ignored. This is also one of the main reasons why students with dependent children may find they receive less under Universal Credit than under the previous benefits/tax-credits system. Please contact us if you require further details.

 

I am a full time student and currently in receipt of some of the 'legacy' benefits which will be replaced by Universal Credit. When will I be affected by this?

If you have not yet been moved onto Universal Credit and are still claiming benefits under the previous ('legacy') system, your claims will remain unaffected until either:

a) you have a change of circumstance resulting in a new claim for benefits or 
b) you are moved onto Universal Credit via the process of ‘managed migration’ (see below).

If you make a new claim - for example, you need to claim assistance with rent and are not currently claiming this - you will need to claim Universal Credit and your other claims will cease. 

So what is ‘managed migration’? This is the process where the government is moving people onto Universal Credit automatically.

The process of managed migration began in July 2019 and the Government hopes to complete the process countrywide by 2024. If you are moved onto Universal Credit through the process of managed migration, you may benefit from ‘transitional protection’, meaning that you will not be made worse off under Universal Credit. Remember though, that transitional protection is not available to those who move to Universal Credit due to a change of circumstances or if you have to make a new claim.

You can find out more information about transitional protection here

Please be aware that you may also need to make a new claim if you separate from a partner or move in with a new partner. This is a change in circumstances that may result in a claim for Universal Credit.

Feel free to contact us if you require further information on the changes which may result in a claim for Universal Credit.

How will my income be affected if my current benefits are transferred to Universal Credit?

This will depend upon your full circumstances, although in many cases full time students may receive a smaller award under Universal Credit than under the current range of benefits.

Feel free to contact us if you wish to discuss your individual circumstances. Also check out our case studies below for an in-depth look at how Universal Credit is calculated in certain student scenarios.

Who should I contact for advice on Universal Credit as a student?

If you are concerned about how any of the above may impact on your income, feel free to contact us so that we can discuss your circumstances and inform you on the impact of being transferred onto Universal Credit, or how becoming a full-time student might affect your current Universal Credits claim. We can also discuss ways to budget if your income drops.

Students who are currently claiming the 'legacy' benefits mentioned above and/or tax credits should also seek guidance from our service when considering making any changes to their current claims. This includes claiming additional benefits during the summer, changing tax credits from a joint to single claim (or single to joint claim) and making new claims for assistance towards rent. These are changes in circumstances that will automatically trigger moving you onto Universal Credit.

I am currently in receipt of Universal Credit. How will this change if I become a full time student?

You may become ineligible - meaning your Universal Credit will stop - unless you fit into one of the categories explained above in ‘Who can apply for Universal Credit?’

If you do fit into one of the categories, your student income will be taken into account, and this may reduce your award. However, this will depend upon your full circumstances.

Take a look at our Case Studies below for some examples of common scenarios, or of course feel free to contact us to discuss further.

Is there anything else I need to know?

Universal Credit claims can take some time to be processed. There may be a wait of up to six weeks between a claim being made and payment being issued.

Also, during this time, existing claims for your previous 'legacy' benefits may cease. It is therefore very important to plan as much as you can in advance if you think you will need to change a benefit claim or make a new claim, as you could be temporarily left with no  benefit income for that six week period.

Feel free to contact us to discuss how to manage financially during this period. It may be that you will need to budget your student finance Maintenance Loan for a longer period. You could try using our PANDA budgeting tool to help you. Or you may be able to apply to the University Hardship Fund or other funding sources.

It's sometimes possible to apply for an advance payment of your Universal Credit if you will be financially struggling while your claim is being processed. You should do this very early in the Universal Credit application process. Please see the Citizens Advice guidance on how to apply here.

Case Studies - see how students can be affected

In the sections above, we explained that Universal Credit calculations look at student income (e.g. Maintenance Loans) differently to the calculations of the 'legacy' system of benefits it replaces.

To show you how this looks in real-world cases, we have put together some Case Studies that show how Universal Credit is calculated in different common scenarios.

Each link opens up a separate Microsoft Word.doc which explains in detail exactly how the calculations are worked out. 

Our examples use the new Universal Credit figures as at April 2022, and are calculated using examples of students who start a course in September who have a Summer break in July and August. Some of our courses do not follow this pattern (such as Nursing and Allied Health Professions courses), and we would advise those students to instead contact us directly for bespoke advice.

Lone Parent 1 (2022) - Rey is a young student, lone parent of one child. The case study shows how much Universal Credit she will receive while studying full-time and claiming a Maintenance Loan from Student Finance England.

Lone Parent 2 (2022) - Leia is a mature student, lone parent of one child. The case study shows how much Universal Credit he will receive while studying full-time and claiming a Maintenance Loan from Student Finance England. 

Lone Parent 3 working (2022) - Finn is a mature student, lone parent of one child, and he works part-time alongside his studies. The case study shows how much Universal Credit he will receive while studying full-time and claiming a Maintenance Loan from Student Finance England.

Married Student 2022 - Padme is married, and has two children. Her spouse is employed. The case study shows how much Universal Credit she will receive while studying full-time and claiming a Maintenance Loan from Student Finance England.

As mentioned above, if you have any questions or concerns about claiming Universal Credit while studying, please get in touch with us

Useful links

Here are some useful external links regarding Universal Credit, which give you more information on how to apply and how it is calculated:

Welfare Benefits Unit - https://www.welfare-benefits-unit.org.uk/resources/ - for a very in-depth look at the benefit. Look for the 'Universal Credit' section of the page, including the list of changes in circumstances that would trigger a claim for Universal Credit. Also includes advice on preparing yourself for the change to UC.

The official Government webgage - https://www.gov.uk/universal-credit - gives an overview of the benefit and how to apply.

Citizens Advice - https://www.citizensadvice.org.uk/benefits/universal-credit/ - gives information and advice on the application process, as well as advice on what to do if things go wrong.

EntitledTo - https://www.entitledto.co.uk/help/Student-income-Universal-Credit - part of their general advice pages on UC.

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