Repay Student Loan to claim Universal Credit

Lowtrawler

My son left University 3 years ago and has not had a job. He has also been unable to claim any benefits because he was gifted money by grandparents which means his savings exceed the Universal Credit limits.

As I understand it, repaying loans does not count as deprivation of assets. Could he repay enough of his student loan to take his savings below the Universal Credit savings limit in order to claim benefits?

sammyjammy

Yes he could but if he hasn't worked for three years since he got his degree what are his plans for work?  Currently he would only repay that loan through work based deductions if he earnt £25k if he is plan 5 type.

Repaying your student loan: How much you repay - GOV.UK

If he is currently under 25 the rate of UC is £311.68 a month, if he still had over £6k left he would have deductions taken from this.  Seems to make much more sense to get a job/any job.

HillStreetBlues

Is there any medical reason your son isn't working?

Lowtrawler

sammyjammy said:

Yes he could but if he hasn't worked for three years since he got his degree what are his plans for work?  Currently he would only repay that loan through work based deductions if he earnt £25k if he is plan 5 type.

Repaying your student loan: How much you repay - GOV.UK

If he is currently under 25 the rate of UC is £311.68 a month, if he still had over £6k left he would have deductions taken from this.  Seems to make much more sense to get a job/any job.

Thanks for confirming. I also agree he should just get a job but he refuses to talk about why that's not happening. He will be 25 this month and so the rate of UC is much higher. In fact, it would roughly match what he is currently spending. Most of his savings are in a Lifetime ISA and so he will incur severe penalties withdrawing those and repaying the student loan - not something to usually consider. I reckon he will need to be on UC for 6 months just to compensate for the penalties / loss of government contribution. Coupled with the dubious benefit of reducing the student loan, unless he expects not to get a job for another year, it may not be a sensible choice.

I am also worried he is not building up National Insurance contributions towards state pension. I know he is young and can catch up but this is another consideration and why he should just get a job.

HillStreetBlues

Lowtrawler said:

Thanks for confirming. I also agree he should just get a job but he refuses to talk about why that's not happening. He will be 25 this month and so the rate of UC is much higher. In fact, it would roughly match what he is currently spending. Most of his savings are in a Lifetime ISA and so he will incur severe penalties withdrawing those and repaying the student loan - not something to usually consider. I reckon he will need to be on UC for 6 months just to compensate for the penalties / loss of government contribution. Coupled with the dubious benefit of reducing the student loan, unless he expects not to get a job for another year, it may not be a sensible choice.

I am also worried he is not building up National Insurance contributions towards state pension. I know he is young and can catch up but this is another consideration and why he should just get a job.

It's a bad idea, Your son won't be allowed just to sit on UC, he will be made to apply for many jobs and take them if offered or face a sanction. He might as well get a job off his own back.

Emmia

Lowtrawler said:

sammyjammy said:

Yes he could but if he hasn't worked for three years since he got his degree what are his plans for work?  Currently he would only repay that loan through work based deductions if he earnt £25k if he is plan 5 type.

Repaying your student loan: How much you repay - GOV.UK

If he is currently under 25 the rate of UC is £311.68 a month, if he still had over £6k left he would have deductions taken from this.  Seems to make much more sense to get a job/any job.

Thanks for confirming. I also agree he should just get a job but he refuses to talk about why that's not happening. He will be 25 this month and so the rate of UC is much higher. In fact, it would roughly match what he is currently spending. Most of his savings are in a Lifetime ISA and so he will incur severe penalties withdrawing those and repaying the student loan - not something to usually consider. I reckon he will need to be on UC for 6 months just to compensate for the penalties / loss of government contribution. Coupled with the dubious benefit of reducing the student loan, unless he expects not to get a job for another year, it may not be a sensible choice.

I am also worried he is not building up National Insurance contributions towards state pension. I know he is young and can catch up but this is another consideration and why he should just get a job.

Are you currently supporting him by providing accommodation and food etc. for free?

If that's the case, then you need to be charging him for the food he's eating and the accomodation he's using - this would swallow up a good chunk of that UC payment, and really ought to encourage him to find employment.

la531983

Lowtrawler said:

sammyjammy said:

Yes he could but if he hasn't worked for three years since he got his degree what are his plans for work?  Currently he would only repay that loan through work based deductions if he earnt £25k if he is plan 5 type.

Repaying your student loan: How much you repay - GOV.UK

If he is currently under 25 the rate of UC is £311.68 a month, if he still had over £6k left he would have deductions taken from this.  Seems to make much more sense to get a job/any job.

Thanks for confirming. I also agree he should just get a job but he refuses to talk about why that's not happening. 

In which case why are you helping him. Let him sort this mess out himself if hes under your roof and wont engage with you. Cruel to be kind.

Lowtrawler

la531983 said:

In which case why are you helping him. Let him sort this mess out himself if hes under your roof and wont engage with you. Cruel to be kind.

We are currently not providing any support. He lives in rented accommodation in a different city and has been using his savings for living costs.

Lowtrawler

HillStreetBlues said:

Lowtrawler said:

Thanks for confirming. I also agree he should just get a job but he refuses to talk about why that's not happening. He will be 25 this month and so the rate of UC is much higher. In fact, it would roughly match what he is currently spending. Most of his savings are in a Lifetime ISA and so he will incur severe penalties withdrawing those and repaying the student loan - not something to usually consider. I reckon he will need to be on UC for 6 months just to compensate for the penalties / loss of government contribution. Coupled with the dubious benefit of reducing the student loan, unless he expects not to get a job for another year, it may not be a sensible choice.

I am also worried he is not building up National Insurance contributions towards state pension. I know he is young and can catch up but this is another consideration and why he should just get a job.

It's a bad idea, Your son won't be allowed just to sit on UC, he will be made to apply for many jobs and take them if offered or face a sanction. He might as well get a job off his own back.

This is one of the reasons why I think claiming UC might be useful - he will receive support and guidance on applying for jobs. I have tried to encourage him to go to the University careers service and take professional careers guidance but he has refused. He won't let anyone review his CV and he won't talk about how he is searching for roles. He lives alone and has a limited group of friends to provide support. I figure if he is claiming UC, he will have no choice but to talk about these things and take action?

Emmia

Lowtrawler said:

la531983 said:

In which case why are you helping him. Let him sort this mess out himself if hes under your roof and wont engage with you. Cruel to be kind.

We are currently not providing any support. He lives in rented accommodation in a different city and has been using his savings for living costs.

Unfortunately, whilst the money he received from his grandparents probably wasn't intended to be used like this, as an adult the money is his to spend as he chooses - and if that's dossing around all day, then that's ultimately his choice.

I can see why you're concerned, but I'm not sure there's much you can do. At some point the money will run out, he'll try to claim UC and discover that he's expected to take any job, rather than a job he wants. 

Newcad

The way the system works he should either find a job, or keep using his savings for living costs.
If he doesn't want to look for a job then once his savings have reduced to below £16K he can claim UC.
There does not seem to be any sense in paying off a student loan (that doesn't have to be paid) so that that happens more quickly.

Once he is claiming UC then he will be vigorously 'supported' and encouraged (read forced) to find work and start work, if he refuses then his UC payments will be reduced, if he continues to refuse his UC will eventually be stopped.

It reads as if he has been supported by others all his life and currently he is living off the gift from his grandparents, he has a shock coming what that money runs out and he has to 'grow up' at last.
(Sorry if that last sounds a bit personal, but I'm sure I'm not the only one thinking it).

Of course a mother has concern for her children - but he is no longer a child, he is an adult.
As an adult he is (or should be) responsible for his own life choices.