Universal Credit student income deduction

How Universal Credit treats student income

Universal Credit does not count all of your student finance. The rules are set out in regulations 68 to 71 of the Universal Credit Regulations 2013, and DWP applies them mechanically, which is exactly why the arithmetic sometimes goes wrong.

The main points are:

Only maintenance funding counts. A loan (or grant) intended for living costs, such as maintenance and rent, is treated as income. Money for tuition fees and specific costs of study is excluded. Grants for things like the Disabled Students’ Allowance, childcare, books, equipment, travel and other specific costs are disregarded.

The maximum available amount is used. If you were eligible for a maintenance loan, DWP counts the maximum loan you could have taken for that year, even if you chose to take less or none. This catches many people out.

The amount is spread across the year. DWP takes the loan (plus any relevant grant) for the course year and divides it by the number of assessment periods for which you are treated as having student income in that year.

A £110 monthly disregard applies. From the monthly figure produced by the division, £110 is deducted for each assessment period in which student income is counted.

Term time and holidays

The single most common source of error is which assessment periods should have student income counted at all.

Student income is only taken into account in assessment periods that fall within the course, and there is a specific exclusion for the assessment period in which the last day of the course year falls, which normally sits at the start of the long summer vacation. In broad terms, during that long summer vacation the maintenance loan should stop being counted, because student finance is not paid for that period.

So the pattern for a typical academic year should be roughly this. During term time and the shorter holidays within the academic year, such as Christmas and Easter, your student income is still counted, because those short breaks are treated as part of the course year. The maintenance loan is not switched off just because you are on a short vacation. During the long summer vacation, after the final day of the course year, the maintenance loan should no longer reduce your Universal Credit until the next academic year begins.

If DWP has continued to deduct maintenance loan income across the summer, or has spread the loan over too few assessment periods so that the monthly figure is inflated, that is very likely to be an error.

How to check the calculation yourself

1. Establish the exact maximum maintenance loan and any relevant grant for the specific course year from your student finance award notice.

2. Remove any element that should be excluded, such as tuition fee loan, and any disregarded grants such as childcare, disabled students’ allowance, books, equipment and travel.

3. Count the number of assessment periods in that course year for which you should be treated as having student income. This should exclude the assessment period containing the last day of the course year and the summer vacation period before the new year starts.

4. Divide the maintenance amount by that number of assessment periods.

5. Subtract £110 from the monthly figure. That is the amount that should be deducted from your Universal Credit in each relevant assessment period.

Compare that figure, and the specific months in which it was applied, with the deductions shown on your online Universal Credit statements. Two things to look at closely are whether the £110 disregard was applied every relevant month, and whether income was wrongly deducted during the summer vacation.

What could explain an apparent error

Not every discrepancy is a mistake. Before concluding DWP has miscalculated, consider ordinary explanations. DWP may be using the maximum loan you were entitled to rather than what you actually received. Your course year may not line up neatly with the calendar, so a short vacation that feels like a break may still fall inside the course year and be counted. The number of assessment periods used may differ from what you expect if your course start or end date is unusual. It is worth confirming the dates DWP holds for your course, because an incorrect course end date is a frequent cause of loan income being counted for too long.

If you think it is wrong

If, after checking, the figures do not match, the route is to challenge the decision rather than simply query it informally, because there are time limits.

1. Ask for a written explanation or breakdown through your journal so you can see exactly which figures and assessment periods DWP used.

2. Request a Mandatory Reconsideration. You normally have one month from the date of the decision, though this can be extended for good reason up to a maximum. Set out clearly the correct maximum maintenance figure, the assessment periods that should be excluded, and the £110 disregard, and attach your student finance award notice.

3. If the Mandatory Reconsideration does not resolve it, you can appeal to the First-tier Tribunal (Social Entitlement Chamber), normally within one month of the Mandatory Reconsideration Notice.

Key facts that would sharpen this answer

To confirm whether your particular deduction is right, the details that matter are your course start and end dates, the course year the deductions relate to, the maximum maintenance loan and any grants shown on your award notice, the specific assessment period dates, and the monthly deduction figures shown on your statements. If you tell me those, the calculation can be checked precisely against the rules above.