Secretary of State for Work and Pensions v AD (UC)

For Universal Credit, a student loan is assessed by its objective statutory character and amount, not by how the student intends to use it or actually spends it. A maintenance loan remains a student loan even where part is used to pay tuition fees. The full amount is relevant under the Universal Credit Regulations 2013, including the maximum loan the student could reasonably have obtained. The exclusion for tuition-fee payments applies to grants, not loans, and cannot be used where the loan provisions apply.

The Secretary of State appealed against a First-tier Tribunal decision allowing two appeals by a student concerning Universal Credit entitlement and recovery of an overpayment. The student had received a maintenance loan of £12,645, of which £9,250 was paid towards course fees. The First-tier Tribunal treated the tuition-fee element as excludable student income and set aside the Secretary of State’s decisions.

The Upper Tribunal considered whether the loan’s statutory classification, or its practical use, governed the calculation of student income under regulations 68 to 70 of the Universal Credit Regulations 2013.

1. Appeal allowed. The First-tier Tribunal had erred in law. Its decision was set aside under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007, and the appeals against the entitlement and overpayment decisions were dismissed.
2. Regulation 68(2) requires student income to be based on the amount of the student loan. Regulation 68(7) defines a student loan by reference to a loan towards maintenance made under regulations pursuant to section 22 of the Teaching and Higher Education Act 1998. The relevant classification depends on objective criteria concerning the source and statutory character of the payment, rather than the student’s intended or actual use of the money (paras [12]-[14]).
3. Regulation 69(1) reinforces that conclusion. It requires assessment by reference to the maximum student loan the person could reasonably have acquired. The same amount would therefore be relevant even if the student had borrowed only the sum said to be needed for living costs (para [14]).
4. The tuition-fee exclusion in regulation 70 applies where student income is based on a grant under regulation 68(4). It does not apply where regulation 68(2), concerning a student loan, applies. The First-tier Tribunal’s paraphrase obscured that statutory distinction (paras [15]-[17]).
5. The absence of an express rule requiring fees to be paid directly to the university did not displace the statutory calculation method. Nor was there evidence that Student Finance England had adopted the inferred arrangement relied on by the First-tier Tribunal. In any event, its intentions could not alter the loan’s statutory character (paras [18]-[20]).
6. The overpayment decision also stood. An overpayment may be recoverable even where it resulted from an error by the Secretary of State’s decision-makers. Remittal was unnecessary because the original entitlement and overpayment decisions followed from the statutory provisions (paras [21]-[24]).

• First-tier Tribunal (Social Entitlement Chamber): On 27 October 2022 it allowed the respondent’s appeals concerning Universal Credit entitlement and recovery of a £764.30 overpayment. Its statement of reasons was dated 10 February 2023.
• Upper Tribunal (Administrative Appeals Chamber): Permission to appeal was granted on 22 May 2023. The appeal was allowed, the First-tier Tribunal decision was set aside, and the original entitlement and overpayment decisions were reinstated.