Student financial support in Scotland: independent review

Interaction of the Minimum Student Income and benefits

Highlights

• New approach for students on benefits
• Introduction of a new special support payment, similar to that already adopted in other parts of the United Kingdom

Background

During the course of this Review we heard evidence that the interaction between the benefits system and the student support system is complex, difficult to understand and needs improvement.

It is important to understand that many United Kingdom-wide benefits that are income-assessed treat student support (including loans) as income, reducing benefit entitlement – sometimes pound for pound. This applies even if the loan is not taken. This would mean that for some students who can claim income-assessed benefits, every pound of student support entitlement would result in an equivalent pound reduction in benefits. Equally, it could mean that some students would have to leave the benefits system entirely – which can be highly disruptive.

In England, Wales and Northern Ireland, students with an entitlement to income-assessed benefits often do not receive student support in the same way as other students. Instead, they receive ‘Special Support Grants’ (‘Special Support Loans’ in England) which do not count as income and therefore do not count against their benefits in the same way. This means that students can receive such ‘Special Support Grants and Loans’ in addition to their benefit payments, and they can often remain within the benefits system.

Students on benefits in Scotland

The current approach to students on benefits in Scotland differs between further and higher education. It also differs from the rest of the United Kingdom.

In further education, students can often remain on benefits while they study. In higher education students are not normally able to remain on benefits while they study. The difference in approach is because:

Students from the lowest income backgrounds in further education are not entitled to any specific amount of student support. Instead, student support is allocated on a discretionary basis so that the funding from their college can be tailored to maximise their entitlement to benefits as a student.

Students from the lowest income backgrounds in higher education are currently entitled to access £7,625 in student support (through a mix of bursary and loan). This can reduce their entitlement to benefits, whether they access the full £7,625 or not.

Under the current approach to students on benefits in Scotland, an entitlement to a Minimum Student Income in further and higher education would count as income for the purposes of benefits. This could therefore reduce or remove benefit entitlement for some students. The Board agreed that Scottish students should not be disadvantaged in this manner and proposed a new and enhanced approach, more aligned with the position in the rest of the United Kingdom described earlier.

“If there was to be parity in funding across further and higher education then we would be keen to see a system that supports students who are eligible for social security benefits to remain mainly on those benefits, rather than having to come off the security of social security benefits.”
Child Poverty Action Group

“ It would also be much better for students who are eligible for benefits not to have to take on debt in the form of a student loan.”
Child Poverty Action Group

New approach for students on benefits in Scotland

For students on benefits, we recommend that the entitlement to bursaries is replaced by two separate payments, a ‘Special Support Payment’ and a ‘Maintenance Award’. These would operate to provide a total support package that matches the bursary available to students from the lowest income backgrounds.

These payments could be supplemented by social security benefits, up to at least the level of the Minimum Student Income. Importantly, and unlike the other nations of the rest of the United Kingdom, students in receipt of income-assessed benefits while they study would not accrue student loan debt. The Board’s proposed approach is illustrated in the table below:

Other support for students on benefits

Students on benefits can face additional challenges where, for example, there is a gap between the point at which their benefit payments end and the point at which their student support payments begin.

In such cases, students should be able to access additional discretionary funding for hardship, with advances of payments where appropriate. These funds would be centrally held and subject to national guidance, but administered locally.

Costs to implement

The recommendation to introduce a Special Support Payment and a Maintenance Award, which together match the minimum bursaries, will require a proportion of the current bursary budget to be repositioned within the current cost.

In addition, further work will be required to understand:

• the cost of creating the entitlement to special support payments for those in further education, which were previously allocated on a discretionary basis and depended on each college’s budget; and
• the position of those higher education students who would receive social security benefits, funded by the Department of Work & Pensions, instead of having to take out student loans. This may require discussions between the Scottish and Westminster Governments on implementation.

In summary, to support the introduction of the New Social Contract for those on benefits we recommend:

• A new approach for students on benefits
• The introduction of a new Special Support Payment and Maintenance Award for students on benefits, which together match the equivalent value of the maximum bursary for those from the lowest income backgrounds
• Continued access to discretionary funds for students on benefits to provide support when transitioning between the student support and benefits systems