Factoring in furlough for September’s students

One assumption is that students in their final year don’t need money to cover the summer holiday. That means that while the max maintenance loan for someone living away from home but outside of London is £9,488, in their final UG year it’s £8,973. Thank god there’s plenty of part time work around – maybe serving customers in hospitality that vaccine passports may prevent students from accessing as customers themselves.

Another is that parents should contribute some of the money. As I say, that max loan for being away from home but outside of London is £9,488, but for most under-25s the amount a student gets is actually dependent on household income – a proxy for their parents income. The loan starts to reduce on a household income of just £25,000, and the difference is what we used to call the “expected parental contribution”.

Set aside for a minute that the max loan is probably not enough to live on. For the 2021/22 academic year, the household income used to determine the rate is based off the 2019/20 tax year. So a student whose household earned £30,000 that year would be entitled to £8,809 in maintenance loan.

Now imagine that your household’s income has been hit, but not massively – let’s say your parent was furloughed for most of the 2020/21 tax year and the household’s income ended up at £24,000. Let’s also imagine that for the time being, you’re still on furlough and the best guess is that you’ll end up on about £26,000 this financial year.

The good news is that the Education (Student Support) Regulations 2011 allow for a more up to date assessment of household income to be made:

Where the Secretary of State is satisfied that the residual income of A in the financial year beginning immediately before the relevant year (“the current financial year”) is likely to be not more than 85 per cent of the sterling value of A’s residual income in the prior financial year the Secretary of State may, for the purpose of enabling the eligible student to attend the course without hardship, ascertain A’s residual income for the current financial year”

“Prior financial year” means the financial year immediately preceding the preceding financial year.

Pull apart the legalese and the bad news is that the assessment of your household’s income in 2021/22 needs to be at 85 per cent or less than it was in 2019/20 to trigger the reassessment. An income of £26,000 would only be a 13.3 per cent drop and so wouldn’t qualify. That’s £544 wiped off the value of your loan this coming September before the academic year even gets going.

Surely to goodness given what’s gone on in the past year at the very very least we should be routinely basing student maintenance loans on 2020/21 incomes? And why the 15 per cent trigger?