Postgraduate Loans: Impacting Benefits And Your Financial Future

Postgraduate loans can affect the benefits you receive, and the rules regarding how they do so are quite complicated. In the UK, if you are only getting a government loan, 30% is taken into account, so you should still be able to receive some Employment and Support Allowance (ESA). If you are in receipt of a research council award, a postgraduate studentship or stipend, you may not get ESA during the course because your student income may be too high, but you might still get a reduced amount of Universal Credit. If you are a full-time student, you can only get Jobseeker's Allowance during the summer holidays, and most types of student finance will reduce your Jobseeker's Allowance payments. If you are studying for a PhD, you can get a Doctoral Loan of up to £28,673 in 2023/24, which does not need to be paid back and does not affect benefits or tax credits.

Does a Postgraduate Loan Affect Benefits?

Postgraduate loans and housing benefits

Postgraduate loans are a form of financial support provided by the UK government to help students fund their Master's or Doctoral degrees. These loans are typically non-means-tested and available to eligible students pursuing higher education. The loan amount can vary, but for the 2025-26 academic year, the maximum loan amount for a Master's degree is £12,858, while Doctoral students can borrow up to £28,673.

Now, let's discuss how these loans can impact housing benefits. Housing benefits, or Universal Credit as it is now known, can be affected by income, including student income. If you are only receiving a government postgraduate loan, 30% of it is typically taken into account when assessing your eligibility for housing benefits. This means that the loan may reduce the amount of housing benefit you receive, but you should still be eligible for some support.

It is important to note that other forms of student finance, such as maintenance loans or grants, can also impact your housing benefits. These additional sources of funding are likely to reduce your Universal Credit payments further. Therefore, it is advisable to carefully consider your budget and explore other funding options, such as scholarships and bursaries, before taking out a larger loan.

Additionally, certain circumstances can make you eligible for extra support. For instance, if you are a single parent, have a disability, or earn below a certain threshold, you may qualify for additional benefits or exemptions. Furthermore, if you receive specific allowances, such as the Disabled Students Allowances from Student Finance England, these will not affect your housing benefit entitlement.

To ensure you receive the correct amount of housing benefit, it is crucial to keep your local authorities informed of any changes in your circumstances, including your student status and income. You may also seek guidance from a Welfare Adviser, who can help you understand how your postgraduate loan affects your specific situation.

Postgraduate student income and ESA (IR)

If you are a full-time postgraduate student, you need to have the required NI contributions or be receiving DLA or Personal Independence Payment (PIP) to be eligible to claim ESA. If you are in receipt of a research council award, a postgraduate studentship or stipend, or a government Master's or Doctoral Loan, this will be counted as income in your benefits assessments over 52 weeks, or the length of your course if it is less than one calendar year. Only 30% of a Master's or Doctoral Loan is counted as income. This means you should be able to continue to get some ESA(IR). If you are receiving the Disabled Students Allowance from Student Finance England, this will not affect your benefit entitlement.

If you are studying for a PhD, you can get a Doctoral Loan of up to £28,673 in 2023/24. This is for full-time students with children under 15 (or under 17 with special educational needs). You can get 85% of your childcare costs covered through this grant, and you don't have to pay it back. It does not affect benefits or tax credits.

Some types of student finance, like maintenance loans or grants, will reduce your Universal Credit payments. If you are a full-time student, you can only get Jobseeker's Allowance during the summer holidays. You might be able to study part-time and still claim Jobseeker's Allowance, but you will have to be looking for and available for work, and you may have to give up your course if a job becomes available.

Postgraduate student income and HB

The rules about how student income, such as grants and loans, affects benefits entitlement are quite complicated. If you are only getting a government loan, 30% is taken into account so you should be able to continue to get some Employment and Support Allowance (ESA). How much you get depends on your individual circumstances.

If you are receiving the Disabled Students Allowance from Student Finance England, these will not affect your benefit entitlement. You must inform your Jobcentre Plus (JCP) and Housing Benefit (HB) offices in writing as soon as your circumstances change. This includes when you become a full-time student, take time out of your studies, or complete your course. You must also send your JCP and HB offices proof of your student income, such as a Master's or Doctoral loan. Full-time postgraduates need to have the required National Insurance (NI) contributions or be getting Disability Living Allowance (DLA) or Personal Independence Payment (PIP) to be eligible to continue to claim ESA.

If you are in receipt of a research council award, a postgraduate studentship or stipend, you may not get ESA during the course because your student income may be too high, but you might still get a reduced amount of Universal Credit (UC). If you are studying for a PhD, you can get a Doctoral Loan of up to £28,673 in 2023/24. This is for full-time students with children under 15 (or under 17 with special educational needs). You can get 85% of your childcare costs covered through this grant and you don’t have to pay it back. It doesn’t affect benefits or tax credits.

Doctoral loans and benefits for students with children

Doctoral loans are available for students pursuing a PhD or other research doctorates such as DPhil or professional doctorates. The loan amount can be up to £28,673 in 2023/24 or £29,390, depending on the source, and is spread evenly across the studies. Doctoral loans are provided by Student Finance England and Student Finance Wales. The loan is charged at an interest rate of RPI (Retail Prices Index) +3%, which was 7.8% as of June 2024. Repayments depend on the borrower's employment status, and any remaining debt is cancelled after 30 years from the beginning of repayments.

Students with children can receive additional support through a childcare grant, which covers 85% of childcare costs and does not need to be repaid. The grant amounts to up to £1,915 a year in England or £1,896 a year in Wales for the 2023/24 period.

In terms of benefits, doctoral loans do not affect benefits or tax credits. However, it is important to note that some types of student finance, such as maintenance loans or grants, can reduce Universal Credit and Jobseeker's Allowance payments. Full-time postgraduates need to have the required NI contributions, receive DLA, or be eligible for the Personal Independence Payment (PIP) to continue claiming ESA. Additionally, if a student is in receipt of a research council award, a postgraduate studentship, or a stipend, they may not receive ESA (IR) during their course due to their student income.

Postgraduate loans and Universal Credit

Postgraduate loans and grants will be taken into account when calculating Universal Credit payments. However, only a portion of the loan is considered as income, and this varies depending on the type of loan and the individual's circumstances. For example, for Postgraduate Master's Loans in England and Wales, 30% of the loan is considered income, while the rest is ignored. This is also the case for Postgraduate Doctoral Loans.

For those receiving the Disabled Students Allowances from Student Finance England, this will not affect benefit entitlement. However, it is important to inform the relevant offices of any changes in circumstances, including becoming a full-time student. Full-time postgraduates must meet certain requirements, such as having the necessary National Insurance contributions or receiving specific benefits, to continue claiming certain benefits.

The impact of a postgraduate loan on Universal Credit can be complex and depend on various factors. For example, in one scenario, an individual's Universal Credit was reduced by £209 per month due to their postgraduate loan. In another case, an individual's Universal Credit was calculated based on an income of £428.60 per month after taking into account their postgraduate loan.

It is recommended to seek advice from a professional source, such as a welfare advisor or the government website, to understand how a postgraduate loan may affect an individual's specific situation.

Frequently asked questions