Kids off to uni soon? Get ready to have your income checked as part of the student finance assessment – and then cough up any shortfall, says our guest, Martin Lewis
They’re 18, finally old enough to vote, ready to leave home and go to university – finally truly independent! Well not quite. Almost every under-25 heading for higher education has their student finances assessed by their parents’ income – not their own.
While all first-time UK undergraduates in England are eligible to get the full loan to pay their fees, the amount of loan they get for living (the maintenance loan) is dictated by their parents’ income.
Many don’t get the full amount. Parents are implicitly meant to fill the gap. Yet this fact, never mind the actual amount, is hardly touched on in any literature. All I can find is one mention buried in the Student Loan Company’s ‘How you’re assessed’ guide (pdf), which has the flaccid phrase ‘depending on their income, parents may have to contribute towards the living costs of their student children’.
This isn’t good enough. The core element that reduces the loan is parents’ income, and this should be explicit. The lack of information means many parents either don’t realise they’re officially supposed to contribute, or see it as a loose amount.
I often hear complaints from parents that ‘the living loan isn’t enough to cover their rent, never mind living costs – I have to give them extra’. This misunderstands that the design of the system factors in parents giving extra; of course students haven’t got enough.
A transparent and fair system would mean the loan letter said something like this (based on a student living in London with £70,000 combined family income):
‘Students – your loan for living is £5,330 a year, this is less than the full loan and we expect your parents to make up at least the £5,372 difference.’
I wrote to the University Minister Jo Johnson requesting that the communication be cleared up. His response was disappointing and confusing. He argued that just because the calculation is based on parents’ income, parents are not expected to make a particular contribution – students can make up the difference from savings or part-time jobs.
Of course they can, yet that answer applies to all students regardless of parental income, so actually the logical implication is all students should get a flat rate. If we don’t expect parents to make up the gap, then why judge on parental income?
I accept politicians may fear pointing out the contribution, especially as the means-tested element this academic year has jumped to up to 56% (it was just 35% in 2015), but even a less polemic statement clearing up the elements would help. Something like…
‘Students – your loan for living is £5,330 a year, which is £5,372 less than the full loan as your parents have higher income.’
As this isn’t happening, to find out how much you’re expected to contribute I’ve developed ready reckoners to help.
Yet while most students are assessed on parental income, there’s no obligation on the parents to contribute (and students can’t force them). Again, this lacks logic – the finances of students and parents should either be separate, or students should have some ability to be able to force parents to comply. The current situation is unclear and therefore unfair to both students and parents.
I’d love to hear your thoughts on this. Is your child or grandchild at university – and did you know what the government expects you to contribute. If you top up their loan, do you feel you have to, and how do you work out what to give them?
This is a guest contribution by Martin Lewis, Founder of MoneySavingExpert.com. All views expressed here are his own, not necessarily those shared by Which?
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