[2024] UKUT 305 (AAC)

The description below relates to the Universal Credit legislation as it stood when the Secretary of State decided the Appellant’s claim for Universal Credit (7 October 2021).

The Universal Credit ‘basic conditions’, in section 4(1) of the Welfare Reform Act 2012 (2012 Act), include a requirement that a person “is not receiving education”. However, regulations made under section 4(2) may provide for exceptions. It is not disputed that the Appellant was excepted from the ‘not receiving education’ requirement by regulation 14 of the Universal Credit Regulations 2013 (2013 Regulations).

Section 8(1) of the 2012 Act provides that the amount of an award of Universal Credit is the maximum prescribed amount less amounts to be deducted pursuant to section 8(3). The deductible amounts under section 8(3) include a claimant’s unearned income, calculated in accordance with regulations. The regulations are contained in Chapter 3 of Part 6 of the 2013 Regulations (regulations 65 to 74). All of the claimant’s unearned income in respect of an assessment period is deducted from the claimant’s maximum amount (regulation 22(1)(a)).

A person’s unearned income is any of their income falling with the descriptions in regulation 66(1) of the 2013 Regulations. Those descriptions include “student income” (regulation 66(1)(e)).

Regulation 68(1) of the 2013 Regulations provides that a person who is “undertaking a course of education, study or training…and has a student loan…or a grant in respect of that course, is to be treated as having student income in respect of” the assessment periods specified in regulation 68(1)(a) to (c). It is not disputed that the Appellant was to be treated as having student income under regulation 68.

Regulation 68(7) defines “grant” as “any kind of educational grant or award, excluding a student loan…”, and “student loan” as “a loan towards a person’s maintenance pursuant to any regulations made under section 22 of the Teaching and Higher Education Act 1998”.

Regulation 68(2) provides that “where a person has a student loan…their student income…is to be based on the amount of that loan”. In those circumstances, any “grant in relation to the period to which the loan applies is to be disregarded” except for any amount specified in regulation 68(3). The excepted amounts include “any amount intended for the maintenance of another person in respect of whom an amount is included in the award” (regulation 68(3)(b)).

If regulation 68(2) does not apply (i.e. a person does not have a student loan), the person’s student income “for any assessment period in which they are treated as having that income is to be based on the amount of that grant” (regulation 68(4)).

Regulation 68(5) treats a student, in certain circumstances, as having acquired a student loan which they have not in fact acquired:

“(5)

A person is to be treated as having a student loan…where the person could acquire a student loan…by taking reasonable steps to do so.”

Where, under regulation 68(2), a person’s student income is to be based on the amount of a student loan for a year, the “amount to be taken into account is the maximum student loan…that the person would be able to acquire in respect of that year by taking reasonable steps to do so” (regulation 69(1)). For the purposes of calculating the maximum student loan, “it is to be assumed that no reduction has been made on account of…any grant made to the person” except in the case of certain excepted types of grant (regulation 69(2)(b)). The excepted types of grant include “any amount intended for the maintenance of another person in respect of whom an amount is included in the award”.

Regulation 70 sets out rules for calculating student income where, under regulation 68(4), a person’s student income is to be based on the amount of a grant.

The calculation of a person’s student income, in relation to a Universal Credit assessment period, is dealt with by regulation 71, but, for present purposes, I need not describe the steps involved.