Universal Credit Q&A – Will my benefits stop if I take out a student loan?


IF you’re thinking of a career change as a result of the coronavirus crisis, our welfare expert looks at whether taking out a student loan will affect your benefits. 

It comes as more than 9million people have been furloughed, with fears many will be made redundant in coming months as employers have to start contributing towards the scheme now before it ends in October. 

One reader is deciding whether to return to university but is worried about her Universal Credit payments

But if you’re thinking of studying to change career or boost your chances of securing a job, will this affect your benefits? 

In the latest instalment of our Universal Credit Q&A, Nichola Salvato, who has four years experience in welfare rights, answers a question from one worried reader.   

HOAR’s Make Universal Credit Work campaign has been calling for changes to the controversial benefit to help struggling households.

Do you have a question? Email [email protected].

I’m thinking of going back to university. Can you tell me how that will affect my Universal Credit? I’m 32 and a single mum of two.

Louise via Facebook

Nichola replies: Many people are rethinking their careers after furlough or redundancy due to covid-19. 

But if you start studying it’s likely to affect your Universal Credit claim – even if you don’t take out a student loan or grant. 

If you decide to study part time and take out a student loan, you will be entitled to claim Universal Credit as long as you can still meet your Universal Credit work related requirements. 

This means you need to continue to search for a job while studying, although it may be possible to get your work related commitments reduced if your course can be considered to be preparing you for your work. 

Nichola Salvato is here to answer your questions about Universal Credit

Speak to your work coach to go about this. 

Alternatively, if you decide to study full time, you’re considered to be receiving an education and in most cases you won’t be entitled to claim Universal Credit. 

But there are some exceptions, namely: 

  • If you are under 21, studying for non-advanced education, such as A levels or a diploma, and you are without parental support
  • If you or your partner are responsible for a child
  • If you or your partner is a foster parent
  • If you have a limited capability for work and are also receiving personal independence payments (PIP) or disability living allowance (DLA)
  • If you have a partner who is not a student
  • Or if you are taking time out from your course because of illness or caring responsibilities

Loans that cover maintenance, such as living expenses, rent and bills, will be deducted from your Universal Credit. 

But any loan amount that is intended to cover tuition fees and other costs of study will be excluded. 

If you get a grant to study, but not a student loan, your grant will be treated as income for Universal Credit, except for any parts that are for:

  • tuition fees
  • related to a disability
  • books
  • course travel costs  
  • childcare costs

You can get a breakdown of your award from Student Finance.

If you are entitled to both a grant and a student loan, your grant will be disregarded for Universal Credit claims except any parts that are for:

  • the maintenance of someone who is part of your Universal Credit claim
  • for housing costs that are part of your Universal Credit claim

Any loans and grants that are taken into account will reduce your Universal Credit across all of the full months you are studying, except for the first £110 per assessment period which will be disregarded. 

You can calculate how much you’ll lose in Universal Credit payments by first working out which parts of your student finance will affect your claim.

Add these together, then divide by the number of months in the year you will be studying, excluding the long summer break, then minus £110. That will give you the monthly sum your Universal Credit will be reduced by.

I hope this is helpful Louise, and I wish you the very best of luck in this new phase of your life if you decide to take the leap.