The implicit “parental contribution” should be clarified in the information on student loans


Students in England should be given clearer information about the cash shortage parents may need to fill in addition to their loans (Chris Radburn / PA) (PA Archive)

Students in England should be given clearer information about the cash shortage that parents may need to fill in addition to their loans.

Minister of State for Universities Michelle Donelan has agreed to improve official information on student financing regarding maintenance loans for students in England, MoneySavingExpert said.

The move comes after MoneySavingExpert founder Martin Lewis wrote an official letter asking for it in June.

Mr Lewis’s letter highlighted an implicit ‘parental contribution’ built into the student funding system – and she argued that this needs to be made explicit.

Student loans are reduced, often by thousands of pounds, due to family income, and parents may need to bridge the gap.

Consumer champion Martin Lewis lobbied for the 'parental contribution'  integrated into student loans in England to be made explicit (Steve Parsons / PA) (PA Archive)

Consumer champion Martin Lewis has pushed for the implicit ‘parental contribution’ built into student loans in England to be explicit (Steve Parsons / PA) (PA Archive)

MoneySavingExpert said the student loan letters did not mention that they could receive less than half of the maximum loan for living expenses due to a means test of household income.

The reduction in maintenance loans starts at a family income of just £ 25,000, affecting millions of students and parents. Many parents are unaware that the system implies that they should make up the shortfall, MoneySavingExpert said.

This could leave parents unprepared and unable to find the money to help. Or parents who have the money might refuse to give more to students, not realizing that the loan amount has been reduced.

Ms Donelan has written to Mr Lewis and has committed her officials to work with the Student Loans Company (SLC) to ensure that future communications with students explain the difference between someone’s maintenance loan and the reward maximum possible, adding: “We will ask the SLC to make it clear that this additional funding could come from several sources, which may include a student’s parents or household members, if applicable…”

Some initial changes to the online pre-application information for prospective students have already been made, MoneySavingExpert said.

He added that if it is too late to make changes to the individual letters, physical letters and information on the online portal that students receive for the 2021/22 academic year, the minister has pledged to ask to the SLC to do so in time for the next academic year.

Loans are reduced due to household income, so parents are expected to close the gap – it’s that simple

Martin Lewis, money saving expert

Ms. Donelan said, “Every student deserves clear information about student finances so they can make informed decisions about their future, especially as they embark on this exciting next step in their studies.

“We are committed to making the application process simpler and more transparent, and we are working with the Student Loans Company to make these important changes. “

Mr Lewis said: “Politicians argue day and night over tuition fees, but the biggest practical problem facing students is that many do not have enough to live on.

“This is in large part because the system does not give families the benefit of foresight when it comes to loans for life. Loans are reduced due to household income which is why parents are supposed to close the gap – it is that simple.

“After years of campaigning and meeting with countless university ministers, I am delighted to have finally met one who listened and understood that students and their families lack the vital information needed to plan financially for the university. .

“On my TV tours I have met students living on cold baked beans, because parents think the loan is enough for them to live and that they should be independent – not realizing that their income meant that the amount received was half of what is considered the true cost of living.

“There is work to be done on these changes, but we will be pushing for the SLC to specifically tell parents and students how much their personal shortfall is after family income signifies the test.”

The system in England works differently from other UK countries, and MoneySavingExpert said it has also been in discussions with ministers from other UK countries.

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