The exception that proves the rule.......
Whatever the often disputed
meaning of the phrase the “exception that proves the rule” there are many money
rules to which some students find themselves frustratingly excepted. Here are just
a few examples.
When
can the repayment terms on a loan change after you have signed the agreement?
When you are a student of course!
Back in the crazy coalition days, (when let’s be honest
much politicking was shrouded in an illusion of compromise) the Government
increased the higher education tuition fees in England to £9,000 for the 2012
cohort of higher education students.
Keen eyed Student Money Advisers led in a taskforce by
Martin Lewis spotted new caveats added to the student support regulations about
the government being able to change the funding rules at any time. Worries began
to creep in about the reassurances those supporting the taskforce were offering
new students regarding affordability and repayments of student loans
Vince Cable the then Secretary for Department of Business
Innovation and Skill announced a new higher loan repayment threshold, increased
from a post study income of £15,000 to £21,000 per year for the 2012 cohort.
This meant a student under the 2012 system could earn more before having to
start repaying their loan.
‘As announced on 3 November, that income threshold will be
£21,000 as from 2016, compared with the current threshold of £15,000. Our
modelling to date has assumed that that threshold should be uprated every five years in line
with earnings. In order to give better protection for those on lower incomes,
we now propose that the uprating should instead be made every year. Around a quarter of graduates will
be better off in this new, more progressive regime than under the current
regime.’
Similarly from the Department for Business, Innovation and Skills
document FAQs regarding the 2012 student finance changes published in 2011:
Q I’m worried that I’m going to be saddled with a lifetime of
debt as a result of the changes
A You don’t have to pay anything back until you are earning more
than £21,000 a year. The £21,000 earnings threshold will be increased
Sounded great. Yet worries were voiced that the return on the new
system of funding might not bring enough monies back into the public purse to
be cost effective. These worries were dismissed by the Department for Business
Innovation and Skills.
Fast forward to Chancellor Mr George Osborne’s Autumn Statement
2015. Buried in the text he had this to say regarding a Freeze to the Student
Loan Repayment Threshold:
2.76 To reduce government debt, the student loan repayment
threshold for Plan 2 borrowers will be frozen until April 2021. The discount
rate applied to student loans will be revised to 0.7% above RPI, to bring it
into line with the government’s long-term cost of borrowing. Taken together,
this will reduce the government’s estimate of the long-term student loans
subsidy to around 30%
This was unprecedented, changing the repayment terms once a
student has already signed up to the system!
The government consulted on the “Freezing the student loan repayment threshold” and only 5%
of the respondents were "for" the proposal of “Keeping
the threshold of £21,000 the same for all post-2012 borrowers until April
2021”, yet the Chancellor still implemented the freeze.
Martin Lewis was not happy - writing an open letter to the Prime Minister and promising to fund some students to take the matter to judicial review . Alex True, an affected student, successfully
petitioned for the matter to be debated in parliament. All, in the end, to no
avail.
What commercial lender could get away with such practices?
Video
When
is paying rent just an illusion?
When you are a student of course......
Most full-time Higher Education
students are not entitled to claim housing benefit.
This may seem strange when for many students their income is certainly low
enough to render them eligible.
The law gets around the problem by
defining who is regarded as “liable
to make payments in respect of a dwelling” for the purposes of housing benefit entitlement – and guess what?
- Full-time students are not regarded as eligible to pay rent.....even though
of course they mostly all do. There are some exceptions, but for the vast
majority of single students without children or disability, paying rent is just
an illusion.
When
doesn’t every child matter?
When you have an ambition to move on to higher
education but you don’t satisfy the residency requirements.
The residency rules are complex and it’s common for
young people to get caught up in their complexities.
There are young people who have live in the UK for
nearly all their lives, may pass through the entire UK schooling system but at
18, when they are excited at the prospect of university, are prevented from
doing so by the robust residency requirements. Often they have never had their
expectations managed that this might happen to them.
I have supported a number of academically brilliant
young people in this situation. It is not uncommon for the young person to be
unaware of the full story of how they arrived in the UK. For example a student
who had been illegally trafficked into the UK at the age of 8, spent time in
local authority care and yet succeeded against the odds to do well at school. Ten
years on, by aged 18, their immigration status was not settled by the Home
Office. They failed to satisfy the required residency requirements that would
allow them to be funded at university.
A welcome tweak to the relevant regulations was
eventually applied in June 2016, acknowledging this as a concerning issue, by
introducing a funding eligibility category based on long residence. While it
isn’t a catch all, it does help.
“Long Residence 13.—(1) A person who on the first day of
the first academic year of the course—
(a) is either—
(i) under the age of 18 and has lived
in the United Kingdom throughout the seven-year period preceding the first day
of the first academic year of the course; or
(ii) aged 18 years old or above and,
preceding the first day of the first academic year of the course, has lived in
the United Kingdom throughout either— (aa) half their life; or (bb) a period of
twenty-years;
When
your parents are British Citizens, work for the UK government and pay tax in
UK? You can get funding right?
Wrong.......
Imagine this scenario – you are 18, your parents are
British Citizens who work as civil servants for the British Forces in, for
example, Cyprus. They have worked all your life outside the UK supporting the
armed forces personnel overseas. They are employed by the UK government and pay
their taxes to the UK. You have always lived with them at residencies with
British Forces Post Office addresses. You apply for funding to go to university
in your parents hometown, in the UK, where your Grandma lives, you would be
eligible right?
Unfortunately, it aint necessarily so. If the student themselves
was born outside of the UK and the number of years the family has spent outside
the UK is not deemed as a temporary absence, then funding could be refused.
Serving forces personnel and their children are exempted
from this but not so their Civil Service colleagues including teachers working
in British Forces schools. This means the children of these teachers, studying
in schools for forces personnel, could be ineligible for funding to attend a UK
university while their classmate, the child of a soldier, would be eligible.
When
is your partner not your partner?
When you are a student under the age of 25 years......
Imagine you are 20 years old and you have been living
with your partner since you were both 16 years old. When you apply for welfare
benefits you are regarded as a couple.
When you become a full-time student the
DWP and the benefit agencies take into account some of your student income
which impacts the means-tested benefit you and your partner are entitled to.
Fair enough.
You apply to Student Finance England for the Adult
Dependent Grant but are told for the purpose of this grant
that as you are under 25 years of age, your partner is not your partner. Even
though they are your partner when it comes to Job Seekers Allowance or
Universal Credit entitlement. Even though they would be considered your partner
by Student Finance England if you were over 25.
As a couple you will lose out on Adult Dependant Grant
income simply by virtue of your age. The non-student partner will lose access
to means-tested welfare benefit income for themselves.
When
is your financially dependent partner not “an adult who financially depends
upon” you?
When they are also a student who is also awarded
statutory student finance.
Which may seem fair enough until you consider a
scenario like this.
Imagine you are a full-time higher education student
aged over 25 years. Prior to starting your course you and your wife claimed Job
Seekers allowance as a couple. When you start your course you are entitled to
student loan for your fees and living costs, and adult dependent’s grant as
your wife has now lost access to Job Seekers allowance - due to your student
income.
Your wife decides to take a further education course to
improve her chances of finding work. She accesses the Advance
Learner Loan to help pay for her tuition fees. She
isn’t entitled to any living cost help. Imagine your surprise then when Student
Finance England advise that you are no longer entitled to the Adult Dependants
Grant, which is stopped.
If your wife were only to stay at home watching TV then
the grant would be safe. The wife has lost all income into the household for
herself because she and her hubby are trying to improve their education.
Caring for someone over 35 hrs/week - eligible for Carers Allowance?
You guessed it? Not if you are a full-time student.
The problem with all these exceptions is that there is
little to no information about them on www.gov.uk
or the student finance web pages. It may surprise some that the government can
change the student loan lending rules even after the loan is taken out.
Students are unlikely to be aware of the devil in the detail of the relevant
statutory instruments. So unless students access specialist money advice before
they start their course, the news that they are the “exception that proves the
rule” comes as an unwelcome, unexpected surprise.
