Family means-testing for student loans is not working

With a place at university secured, students from complex family situations may find themselves wondering how they will make ends meet.

Many will only be set to receive a “non means-tested loan” or their families have refused to make the contribution that the state has deemed they “should” be making.

Dependence and independence

The student funding system – administered by the Student Loans Company (SLC) in England, Wales and Northern Ireland, and the Student Awards Agency Scotland (SAAS) – creates two types of student: the dependent student and the independent student.

All single young adults aged 18-24 applying for statutory finance are automatically deemed dependent on the parental household for means-testing purposes. That is unless they can satisfy criteria for independence such as being a care leaver, or can “prove” they have no relationship with both of their living biological or adoptive parents. This latter category is strongly weighted towards having a lack of communication with their parents for at least one year prior to starting university.

The intention for this in the current policy context is to ensure that families with sufficient money are contributing and those students are given minimal state student loan. Independent students are entitled to borrow the maximum to cover the shortfall created by a lack of family means. But how divorced and estranged families are currently understood and processed is intensely problematic.

Fragile family relationships

In some cases, the system decides who is considered family for a student, and who a young adult should be “dependent” on. For example, a new partner or step-parent who joins the household just before or after the commencement of studies will have their income taken into consideration in the means-testing process, despite the fact they might never have had any comprehensive relationship with that young adult.

Conversely, in a divorced family, if a student’s “dependent” biological parent dies, the step-parent is barred from being the student’s sponsor however strong and extensive the relationship may be. The student is expected to rely on the other biological parent (if alive) in the next academic year, even if there is only tentative contact and no comprehensive relationship. The only possible exception is if they can prove they have not known or met the other biological parent or have not had any contact at all.

Students who are financially “cut-off” as a result of family difficulties, for example, after coming out as LGBT+ or rejecting an arranged marriage, are expected to have no contact with both parents to be able to claim the additional loan as an independent student, perhaps discouraging any attempts at reconciliation? Recent news has suggested that some estranged students have been financially penalised for minimal and sometimes involuntary social media contact with family members post-breakdown.

In all of these examples, students do not receive the funding that they need or are entitled to. If fragile parental and step-parent relationships are means-tested, but do not yield financial support for the young adult, there is no legal recourse for the student to claim their entitlement. They are simply left short of maintenance loan. This issue of parental non-payment was explored in a fascinating exchange of letters between Martin Lewis and the former universities minister Jo Johnson in 2016.

Family policy and guidance

Families as the ultimate source of financial support are clearly a grey area in policy terms and ministers seem hesitant to explicitly say that a student should rely on them. But current educational policy and guidance is anachronistic in its view of family relationships. It is largely weighted in favour of nuclear families who are close, supportive and in contact and it does not understand the tentative environment in which many old and new family relationships exist. Figures show that over 100,000 couples divorce each year. Isn’t it time for HE funding policy to reflect understandings of family which are beyond simple parental biology and take more flexible views of “dependent” or “independent”? Shouldn’t a student get the choice as to who sponsors them, who they consider family, and who is most likely to give them financial support? And given they’re adults, aren’t they the best person to determine who they are dependent on?

It’s likely that the future will see family forms change even more. The children of LGBT+ parents and single mothers who have used artificial insemination and surrogacy paths will soon be accessing HE. Must these young people rely on their biological fathers or surrogate mothers for means-testing if their parent dies? Will they be expected to prove they have never known them or had contact with them? And what happens if they do have minimal contact – will that donor or surrogate be expected to meet maintenance costs?

Falling through the cracks

The current official language suggests that the means-tested part of a student loan is “optional” and that it is a “choice” as to whether the student takes part in the process. But in this climate, it is hardly a choice. The level of funding for a non-means tested maintenance loan is is just £3,928 per year, split into three payments of £1,309.

We know how squeezed students are from recent reports such as the NUS poverty commission. Other research has outlined that estranged students, even with a full maintenance loan allowance, often work full time alongside their studies or are at risk from dropping out due to financial pressures. The statutory funding that is allocated to HEIs to act as a safety net for students who are struggling financially is rarely given out in £4,000 lumps – the amount of shortfall between a non-means tested loan and full maintenance support.

Rights around family

It can’t always be assumed that biological parents will financially support their children or that every step-parent who legally adopts their partner’s children wishes to step up to the mark. Some biological family relationships are tenuous and in flux, and some very distant but not completely estranged. For others, a step-parent or grandparent has been and always will be the functional parent.

These family riddles are an inconvenient truth for those making HE funding policy. The system assumes that because a family situation that is more complex than a nuclear family is more likely to abuse the system. In fact, this is a growing group of often vulnerable students, frequently part of minorities, to whom equalities law apply,

For us at Stand Alone it is the principle and the rights to family and private life that are at stake here. It should be an individual’s choice as to which parental figure young adults are “dependent”, who they ask for income details, and who they look to for financial support – not the choice of the state. If planning policy and operations around families in the modern day is too difficult or too much of a political hot potato, the non means-tested maintenance loan must transform into a living loan, and become an amount that all students can really survive on.

One response to “Family means-testing for student loans is not working

  1. Pretty much all the points made in this article are valid. But its still only half an article – not just because the issue of additional siblings attending university isn’t mentioned (one of the biggest drawbacks to the residual household income approach).

    Yes, reliance on household income and parental contributions to bolster the maintenance loan has many problems.
    But the current approach could still be the least worst option in terms of administrative practicality and cost.

    Are there any examples of world HE systems where students have either not had to pay maintenance up front / as they go or where (in the words of the article) students are given the choice as to who sponsors them, who they consider family, and who is most likely to give them financial support? If so, it would be worth looking at how well they actually operate.

    It is also worth noting that while students have protested against tuition fee rises, there has not (yet) been anything like the same level of discontent over maintenance loans. This could of course change: there have been a series of media articles in the broad sheet newspapers about this aspect of university funding.

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