For many students in the UK, managing living costs alongside studies can be challenging. Government support, such as student finance and Universal Credit, can help, but their interaction often causes confusion.
Not all student income affects Universal Credit in the same way, and some students may be eligible while others are not. Understanding how loans, grants, and bursaries impact your entitlement is important for planning finances effectively.
This article explains who can claim Universal Credit, how student income is considered, and what exceptions or support options are available.
What Is Universal Credit and How Does It Apply to Students in the UK?
Universal Credit (UC) is a means-tested welfare benefit that replaces several older benefits, including Housing Benefit, Income Support, and Jobseeker’s Allowance. It aims to support individuals or families with low income or who are out of work.
However, when it comes to students, eligibility is not straightforward. Most full-time students are not eligible for Universal Credit unless specific circumstances apply. You may qualify if:
- You are a single parent responsible for a child or young person.
- You receive Personal Independence Payment (PIP) or Disability Living Allowance (DLA) and have a limited capability for work confirmed before your course began.
- You are in a couple and your partner is eligible for Universal Credit.
- You are over the State Pension age and have a partner below that age who qualifies.
Part-time students, on the other hand, are generally treated more leniently. If your course is part-time and you are still able to meet the work-related commitments in your UC agreement, you may be eligible to receive payments.
How Is Student Income Assessed by the DWP for Universal Credit Purposes?
When you apply for Universal Credit, the Department for Work and Pensions (DWP) assesses your total income and capital to determine how much UC you can receive. Student income, including loans, grants, and bursaries, is considered part of this assessment.
The DWP divides your maintenance loan across the academic year, usually nine or ten months, to calculate a monthly income figure. Importantly, not all student-related funds are treated as income. Tuition fee loans, for instance, are ignored because they are paid directly to your university.
Another critical rule is the £110 monthly disregard, meaning that the first £110 of your student income each assessment period is not counted toward your Universal Credit calculation. This provides a small buffer to ensure that students are not overly penalised for accessing educational funding.
Overview of How Student Income Is Treated for Universal Credit:
| Type of Student Income | Counted as Income? | Impact on UC Payments |
| Maintenance Loan | Yes | Reduces UC entitlement after £110 disregard |
| Tuition Fee Loan | No | Ignored by DWP |
| Maintenance Grant or Bursary | Yes | Treated as income |
| Disability-Related Grants | No | Exempt from UC calculations |
| Discretionary or Hardship Funds | Depends | Usually treated as capital, not income |
How Does a Maintenance Loan Affect Your Monthly Universal Credit Payments?
One of the most significant factors that affects your Universal Credit while studying is the maintenance loan, but how it’s treated in the monthly assessment can make a major difference to your entitlement.
How the Maintenance Loan Is Calculated Across Academic Periods
Maintenance loans are designed to cover living costs such as rent, food, and travel. The DWP counts these as income because they support your everyday expenses, the same costs UC is meant to help with.
The maintenance loan you receive is divided by the number of months in your academic year, excluding the long summer break. For example, if you receive £9,000 over nine months, the DWP will consider £1,000 per month as income (minus the £110 disregard).
The £110 Monthly Disregard and Its Application
Each UC assessment period has a standard disregard of £110 for student income. This means only the remaining amount after this threshold affects your UC payment. Although the disregard offers some relief, most students still see a reduction in their monthly UC.
Example of UC Reduction Based on Maintenance Loan:
| Monthly Maintenance Loan | £110 Disregard | Amount Counted as Income | UC Payment Impact |
| £1,000 | £110 | £890 | Reduced by £890 |
| £800 | £110 | £690 | Reduced by £690 |
| £600 | £110 | £490 | Reduced by £490 |
In practical terms, this means that for every £1 of loan income (after the disregard), your Universal Credit is reduced by the same amount.
Are Tuition Fee Loans and Educational Costs Counted as Income?
Tuition fee loans are paid directly to your university to cover course fees, not to you personally. Therefore, these loans are not counted as income and do not affect your Universal Credit payment.
Other educational expenses that are disregarded include fixed amounts for books, travel, and equipment, as well as payments made to cover tuition or exam fees. These exclusions are designed to ensure that necessary study costs do not reduce your entitlement.
Do Grants, Bursaries, and Scholarships Reduce Your Universal Credit?
Grants and bursaries, especially those provided for living costs, are usually treated as income for UC purposes. However, the rules vary depending on the purpose of the payment.
Which Grants Are Fully Counted as Income?
Maintenance grants and most general bursaries are taken into account in full because they contribute to your living expenses. For example, a teaching bursary or NHS bursary will typically reduce your UC.
Which Grants Are Exempt from Universal Credit Assessments?
Certain types of student support are disregarded, including:
- Disability-related allowances (such as DSA)
- Parents’ Learning Allowance
- Childcare Grant
- Special Support Element of a maintenance loan
The Special Support Element deserves special mention, it’s designed for students with disabilities or specific personal circumstances and can reach up to £4,461. This element is excluded from UC calculations, offering valuable support to eligible students.
Can You Still Receive Universal Credit If You Are a Full-Time Student?
Generally, full-time students are not eligible for Universal Credit. However, several exceptions apply. You can receive UC if:
- You are a single parent with a dependent child.
- You receive PIP or DLA and have a limited capability for work.
- You are a member of a couple where one partner qualifies for UC.
- You are over the qualifying age for State Pension but have a younger partner on UC.
Your eligibility may also depend on your claimant commitment, a set of agreed activities required to keep receiving UC. Full-time study can make it difficult to meet these commitments, especially if work search or availability is required.
Does Your Study Mode (Part-Time or Distance Learning) Change Your UC Eligibility?
Study mode plays a crucial role in your UC eligibility. The DWP classifies distance learning (for instance, Open University courses) as part-time, even if your course workload is equivalent to full-time study.
If you are studying part-time, you can usually continue claiming UC as long as you can satisfy your work-related requirements, such as attending interviews or engaging with your work coach.
For example, if your part-time course involves fewer than 21 hours of study per week, you are generally treated as available for work, keeping you eligible for UC.
Does Student Finance Affect Universal Credit in the UK?
This is the central question that concerns most students, and the answer is yes, in most cases. Student finance affects Universal Credit primarily through maintenance loans and grants being treated as income. Tuition fee loans are excluded, but maintenance support directly reduces your UC entitlement.
The impact can be summarised as follows:
- Maintenance loans and most bursaries reduce UC.
- Tuition fees and educational costs are disregarded.
- Disability-related or childcare support is excluded.
- The £110 disregard provides a limited buffer.
The exact amount your UC decreases depends on your total student income, your course duration, and any applicable disregards.
What Happens to Your Universal Credit During Academic Breaks and Summer Holidays?
During the long summer vacation, students generally do not receive maintenance loans. Consequently, your student income is not counted during these months, which may increase your UC temporarily.
However, this depends on your circumstances and whether you still meet other eligibility requirements, such as being available for work. Always report changes to the DWP, as unreported shifts in student income or enrolment can lead to overpayments or benefit suspension.
How Are Joint Universal Credit Claims Affected by One Partner Studying?
If you make a joint UC claim with your partner, both your incomes are assessed together. This means that one partner’s student finance may reduce the overall UC payment for the household.
For example, if your partner receives a maintenance loan for living costs, this is added to your household income. However, if part of their grant or bursary is specifically for a partner’s support, such as an Adult Dependant’s Grant, this portion may also be counted.
Couples should therefore review their household finances carefully and notify the DWP of any changes in either partner’s education or income status.
What Support Exists If Student Finance Significantly Reduces Your Universal Credit?
When student finance significantly reduces your Universal Credit entitlement, it’s important to know that additional forms of support may be available to help ease financial pressure.
Can You Apply for Hardship or Discretionary Support Funds?
If your UC drops significantly due to student income, universities often offer hardship funds or discretionary support. These are designed to help students who face unexpected financial struggles.
Such payments are typically treated as capital, not income, meaning they may not affect your UC unless your total savings exceed £6,000.
Other Benefits or Support to Consider
You may be eligible for alternative benefits such as New Style Employment and Support Allowance (ESA) or Council Tax Reduction. Students with disabilities can also claim Disabled Students’ Allowance (DSA), which covers additional educational costs and is excluded from UC assessments.
Supplementary Financial Support Options:
| Type of Support | Who Can Apply | Impact on UC |
| Hardship or Discretionary Fund | Students facing financial crisis | Usually treated as capital |
| New Style ESA | Those with limited capability for work | No direct UC impact |
| DSA | Disabled students | Exempt from UC calculations |
| Council Tax Reduction | Low-income households | Separate from UC |
Where Can Students Get Help with Understanding Their UC Entitlements?
Navigating how student finance affects Universal Credit can be complicated, so it’s important to get advice tailored to your circumstances.
Several independent and government-backed services provide free guidance on benefits, including what counts as income and how to apply or appeal.
Useful resources include:
- Online benefit calculators to estimate how student finance might affect your payments (note: these are only estimates).
- University finance teams or student welfare advisers for guidance on complex funding situations, such as multiple grants or overlapping assessments.
Documenting your course details, loan breakdown, and financial needs in advance can make the application process smoother.
This preparation helps you stay compliant with DWP rules while ensuring you access both Universal Credit and any additional support you may be entitled to.
What Should Students Keep in Mind Before Applying for Universal Credit?
Applying for Universal Credit as a student requires careful planning, especially if you also receive student finance. Understanding how UC works and how your income is assessed can help avoid unexpected issues.
Key Considerations Before Applying:
- Monthly assessments can cause payment variations.
- Match your claimant commitment to your study workload.
- Notify DWP if you have a disability or caring duties.
- Report course changes, withdrawals, or new grants promptly.
- Keep records of income and course details.
Staying organised, planning ahead, and maintaining clear communication with the DWP are essential for successfully managing Universal Credit as a student.
Conclusion
Balancing student finance and Universal Credit can feel complicated, but understanding the rules helps you make informed choices.
In short, maintenance loans and most grants reduce your UC payments because they are treated as income. Tuition fee loans, disability support, and specific educational allowances are exempt.
If your student income causes financial strain, explore hardship funds, additional benefits, or professional advice services. Always communicate openly with the DWP and your university to ensure compliance and maximise available support.
Ultimately, careful planning and awareness can help you manage both systems effectively, allowing you to focus on your studies without unnecessary financial stress.
Frequently Asked Questions
How far back can Universal Credit be backdated if I become eligible mid-term?
Universal Credit can sometimes be backdated for up to one month if you had good reason for not claiming earlier, such as awaiting documentation or course confirmation.
Will my Universal Credit increase if I defer or take a study break?
Yes, if you suspend or leave your course, your student income will no longer be counted, potentially increasing your UC entitlement.
Does receiving Disabled Students’ Allowance affect Universal Credit?
No. DSA is entirely excluded from UC calculations and will not reduce your entitlement.
Can mature or postgraduate students claim Universal Credit?
Yes, mature and postgraduate students can claim UC if they meet eligibility rules. However, part of postgraduate loans or stipends may still count as income.
What happens if I receive money from parents or guardians?
Parental gifts are not classed as income unless they form part of a formal grant or living cost arrangement.
How can I estimate how much Universal Credit I’ll receive as a student?
You can use an online benefit calculator. Input your loan amount, course type, and personal details to estimate your potential UC.
Can I challenge a DWP decision if my student income is miscalculated?
Yes. You can request a Mandatory Reconsideration within one month of the decision. If unresolved, you can appeal to a tribunal.
