Housing benefits and student loan repayments

panthony

Dear all,

I would be interested to hear peoples legal and/or moral thoughts on the following circumstances please

While my wife was at uni for 4 years she received a student loan and maintenance loan both of which were counted by the council as "income" for benefit purposes, although technically they were loans and not income.

My wife has since finished uni and has now begun repaying those loans, BUT the council will not disregard the money she is repaying, even though it is taken from her wage packet at source and she never receives this "repayment" money into her bank acount.

According to the local council it is law that student loan repayments are not "disregarded" for benefit purposes. Even if this is law, it seems very unfair that they WONT disregard the loan repayments even when the loans WERE counted as income while at uni. It seems very hypocritical to me.

Surely, if income is income, and a loan is a loan, then the council should not be allowed to confuse the two types of finance and jump from one back to the other whenever it suits them.

Could the law on this be challenged, as it appears the rule changed in order to suit their own means rather than the reality of the financial situation.

Ideas and thoughts on this please., many thanks

Dogger69

The law on this has not changed. You can challenge any law you wish, but the practicalities of doing so make the chances of success minimal.

I have no problem with this stance - student finance is not the same as a conventional loan, you pay it back at a minimal rate and next to no interest. Plus of course a university education gives far greater scope to advance in life and get away from dependence on benefits.

dktreesea

Presumablky if your wife is repaying these loans she must have sufficient earnings to be able to do so? Don't you have to be earning £21k a year, before the loan becomes repayable?

letthemeatcake

I agree that the student loan should be counted as income as its money in your pocket to live off whereas the payments now being deducted are not even reaching your pocket so it does seem a little unfair.But I suppose no loan repayments are ever taken into consideration for the purpose of benefit claims which is why so many struggle.

StormyWeather_2

It does seem unfair that they regard the loans as income but don't count repayments as a reduction in income.

I assume it's done this way to avoid abusing the system somehow. I can't think what though. Even if you go bankrupt student loans aren't automatically written off.

soontobemrsg

It has always been the case that student loans are considered as income for the purpose of benefit calculations.

No other loan repayment is considered for the purpose of claiming benefit so I see no grounds on which you can challenge the law. Do however let us know if you decide to try and are successful...I'd get a windfall in rebate

Horseunderwater

If she is earning over £21k, then surely there would be no Housing benefit anyway? Or am I missing something here?

StormyWeather_2

If you take out a student loan for £3k that counts as £3k income. Then you repay £3k, that £3k is also included in the income calculations. So the same income is counted twice.

If you take out a regular loan of £3k that wouldn't be classed as income, so it's only counted once.

I think this is what the OP has an issue with.

Maybe it's because student loans are easier to come by?

StormyWeather_2

Horseunderwater wrote: »

If she is earning over £21k, then surely there would be no Housing benefit anyway? Or am I missing something here?

Renting privately, so higher rent.

soontobemrsg

StormyWeather wrote: »

If you take out a student loan for £3k that counts as £3k income. Then you repay £3k, that £3k is also included in the income calculations. So the same income is counted twice.

If you take out a regular loan of £3k that wouldn't be classed as income, so it's only counted once.

I think this is what the OP has an issue with.

Maybe it's because student loans are easier to come by?

I understand what the OP has the problem with however student loans only get repaid after a certain income level unlike a regular loan and the interest rate is much much lower.

StormyWeather_2

soontobemrsg wrote: »

I understand what the OP has the problem with however student loans only get repaid after a certain income level unlike a regular loan and the interest rate is much much lower.

That's a good point. I suppose some will never be paid back or only paid back in part. That might be why they count it as income when you initially receive the loan.