A couple of things in the news recently:

  • Martin Lewis' analysis that most students will never pay their loans off.
  • The Pension Minister's suggestion that the WASPI women retrain.

got me wondering....

If (and this is a purely hypothetical question for me) I was in the situation of being a few years from a low-income retirement, or already retired on a small income (just the state pension, or with a small boost from some small DB/DC schemes, but still below the £21K repayment threshold and with little prospect of raising that) is there any reason I shouldn't just take out a student loan for as much living expenses as I can get for as many years as I can get them? After all, I'm never going to pay even one penny of it off.

Presumably the ~7-9K p.a tuition fees must be paid direct to an educational institution (and presumably it'd be necessary to actually get accepted on a course by one, but any old thing would do). But there's ~8-11K p.a in "maintenance loan for living expenses" up for grabs, for several years if I can avoid getting chucked off whatever easy-ride course I've signed up to (but with the institution getting the tuition fees, it's not like it's in their interest to kill the goose laying the golden eggs either).

A quick scan of some of the things at https://www.gov.uk/student-finance/new-fulltime-students didn't throw up any obvious obstacles (like an age limit) but I didn't look very closely. (Would be very interested in stories of older people actually exercising this path.)

So, to summarize: could student loans be used as "free money" for some older people, or is there some reason this won't work?


I note this Guardian article on older students includes (my bold):

Students can apply for a loan to cover their tuition fees if they want to study for an undergraduate degree or certificate of higher education, have never studied at this level before and are classified as a home/EU student. Students then only begin repaying the loan once they are earning £21,000 a year – an unlikely situation for many pensioners. The loan is written off after 30 years.

Obviously that rule about loans being to study at a higher level than studied before - see Ganesh's comment, and the quote above - would rule easy access to a loan out for some people, but I'm guessing a lot of the people with the most to gain won't have had any sort of higher education; the "higher education participation rate" in the UK was below 15% until the 1990s.

Update: Here's a 2013 Telegraph article which includes the text "could a student loan be the ultimate freebie for pensioners?" (although the rest of the article is more about getting "free tuition" rather than "free money").

closed as off-topic by Harper, MD-Tech, Dheer, Pete B., Brythan Sep 1 '17 at 2:55

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    You mean aside from the ethics and all... – Joe Strazzere Aug 22 '17 at 0:10
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    If you already have a degree, there used to be a restriction on getting student funding a second time, but I can't find any reference to that now. – Ganesh Sittampalam Aug 22 '17 at 8:00
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    "After all, I'm never going to pay even one penny of it off." This is called fraud. Purposefully taking out a loan with the intention to (a) use it for a different purpose than stated; and more importantly (b) never pay it off, is fraud. It is unethical, and illegal. – Grade 'Eh' Bacon Aug 22 '17 at 12:27
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    I'm voting to close this question as off-topic because questions asking how to commit fraud should not be on-topic for this site. – Grade 'Eh' Bacon Aug 22 '17 at 12:28
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    @Grade'Eh'Bacon I think this is more in the "tax avoidance" than "tax evasion" category - it's about working within the rules so that the contractually required repayment is 0. – Ganesh Sittampalam Aug 22 '17 at 12:50

In theory - Yes.

  1. You'd have to get accepted as a mature student - I would suspect some institutions have an upper age limit maybe?
  2. You'd need to pay tuition fees as well (or get a loan for this)
  3. The loan would last for 30 years - you would need to earn less than 21K a year for all this time.
  4. Household income counts for the calculation of the amount of maintenance loan - so having money already or a partner with money will affect it (not sure how it affects, but will make it a lot less - most young people don't have much savings)
  5. If you've already had student loans, they are not likely to give you more.

So as long as someone will accept you as a (very) mature student, you plan to never earn over 21k a year for the next 30 years (no longer wiped out at 65), you could get a loan, slightly unethically (unless you fancy doing the course).

Also if you did have to start paying it back - since interest rates are currently 6.1% this means the loan is doubling potentially just under every 12 years (approx)

As to the side question of is it fraud? I couldn't say. Is a student getting maximum loans but planning on being a jobless bum for the rest of their lives and never paying back loans also committing fraud? One could argue Yes, but i don't believe a lack of ambition is currently illegal.

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    I'm not sure. You promise to pay if you earn over 21K, so if you earn more than that and don't repay, that would be fraud. Same as if you were to flee the country and earn more than 21K. However does that make a young student who never intends to earn above 21K also guilty of fraud? – Tim Aug 22 '17 at 14:39
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    I think the OP's suggestion was to do the minimum to pass the courses he signed up for, not that he wouldn't go to class at all. – Ganesh Sittampalam Aug 22 '17 at 14:39
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    I'd also suggest that people not already specifically familiar with the UK student loan system read up on how it works and the government policy behind it, before rushing to judgement on what would be fraud and what wouldn't. – Ganesh Sittampalam Aug 22 '17 at 14:42
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    If the question was, can I study for free without ever realistically having to pay it back? Then the answer is definitely yes. I agree that if you have no intention of studying then that does sound fraudulent, but no intention of paying it back is not fraudulent, it is just a shortcoming of the agreement in the first place. telegraph.co.uk/finance/personalfinance/9800374/… – Tim Aug 22 '17 at 15:42
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    One thing not mentioned is the loan is limited to £3,566 for over 60's, if you read the small print. Hence the similar amount in the Telegraph article, give or take a bit of inflation. – richardb Aug 22 '17 at 22:03

As noted in richardb's comment buried in the comments/debate on the other answer (and all credit for this answer should be due to him): a significant issue with the scheme as originally envisaged in the question (up to £11K pa) is that there is actually a cap on the maintenance part for over 60s:

On page 28 of this "Student finance - how you're assessed and paid" document it says:

If you're 60 or over on the first day of the first academic year of your course you can apply for a Maintenance Loan of up to £3,566, depending on your household income. Your loan will be reduced by £1 for every £5.46 of household income over £25,000, up to £43,675. If your household income is more than this you won't get any Maintenance Loan.

I'd consider that to make this route considerably less attractive... and maybe that's the intention of the rule! (Although I might not think that was so true if I was actually on the UK's state pension of £6K a year and desperate. However, I was originally thinking more in terms of comparing the accumulated "free money" over the three years with the UK's average - and woefully inadequate - pension pot of £50K, rather than with pensioner income).

I'll leave those who found the idea of exploiting government incentives so outrageous to ponder the at least as troubling ethics of discriminating against people based on their age, especially when that government apparently likes the idea of older people retraining.

(Just to complicate things: I note that one of the possible criteria for applying for a "special support grant" - an alternative to a maintenance loan - is being over 60. That's a grant not a loan and doesn't have to be repaid, but abusing that would seem even to me to be on a par with faking disability to get benefits or similar).

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