What is the SFE ‘assessed contribution’?

I’m not a fan of the higher education funding system or the organisations responsible for running it. In fairness to Student Finance England, they’re only following the rules and procedures enacted by successive governments and parliaments. Problem is, these procedures seem completely nonsensical. Today we will learn about the assessed contribution on maintenance loans.

This post will use the 2020/21 ‘no benefits’ SFE rates for London, but the principles are exactly the same for those studying at home, away from home outside London, and overseas. These figures don’t apply to students in their last year, because the final year loan has a lower cap (even if your last year is no shorter than any other 🙄).

The basic system #

The way loan entitlements are calculated is fairly straightforward. You start with a maximum loan known as the main rate and deduct £1 for every £X (the taper) of your household income above £25,000 until only the minimum loan is left.

Full loan - ((household income - £25,000) / taper) = entitlement

If your household income is £25,000 or below, you’ll get the maximum loan.

The table below shows how the full loan is broken down into the guaranteed minimum loan and the income-assessed portion.

Full loan Minimum loan Income-assessed portion Taper
Living at home £7,747 £3,410 £4,337 £7.66
In London £12,010 £5,981 £6,029 £7.46
Out of London £9,203 £4,289 £4,914 £7.58
Overseas £10,539 £5,095 £5,444 £7.51

You’re always guaranteed the minimum loan — that’s the portion of the full loan not decided by your household income. If you’re not able to or refuse to provide household income information you’ll receive the minimum loan.

Example: £35k household income #

For a student with a household income of £35,000, the calculation would go like this:

£35,000 - £25,000 = £10,000
£10,000 / £7.46 = £1,340
£12,010 - £1,340 = £10,670

£25,000 is discounted.
£1 is taken for each full £7.46 in the remaining £10,000.
This is taken from the full loan of £12,010.
Your loan is £10,760.

Example: £70k household income #

Another example; this time a high-earning household with an income of £70,000:

£70,000 - £25,000 = £45,000
£45,000 / £7.46 = £6,032
£12,010 - £6,032 = £5,978

As before, £25,000 is discounted.
£1 is taken for each full £7.46 in the remaining £45,000.
This is taken from the full £12,010 loan.
Your loan isn’t £5,978 though.

This is below the minimum (non-income assessed) loan of £5,981, so the actual entitlement will be £5,981. This is all of the non-income assessed portion (49.8% of total) and none of the income-assessed portion.

This rule actually applies to any student with a household income of £69,977 or above (in London for 2020/21). So whether your household earns £70,000 or £700,000, you’ll still get £5,981.


It all changes at £42,875 … we think #

It all gets a bit more confusing with a household income of more than £42,875 because something called the assessed contribution applies above this level. It goes something like this…

Example: Assessed contribution for £45k household income #

First you calculate the amount of loan to be deducted from the full loan at a household income of £42,875 (the threshold for the assessed contribution):

£42,875 - £25,000 = £17,875
£17,875 / £7.64 = £2,396
This is the contribution disregard.

Next you calculate the amount of loan to be deducted based on the actual household income (£45k in this example):

£45,000 - £25,000 = £20,000
£20,000 / £7.46 = £2,680
This is the income assessment.

To finish, you deduct the contribution disregard from the income assessment:

£2,680 - £2,396 = £284
This is the assessed contribution.


So, what’s the big issue? #

Well there’s no issue as such, we just don’t know what significance it holds. What does it do? We know how to calculate it, but not what impact it has on loan entitlement.

My simple Excel sheet gives the same loan entitlements as SFE’s documents by just calculating the income assessment and subtracting it from the full loan.

My spreadsheet (without assessed contribution):
£12,010 - (£45,000 - £25,000) / 7.46 = £9,329

SFE figures for £45,000 household income:
Assessed contribution — £284
Loan — £9,330

I have no idea. I’ll surely have time to find out though — SFE haven’t managed to calculate my entitlement correctly in the past two years and I’m not holding out for a miracle this year.


The glossary #

Assessed contribution #

Calculated by subtracting the contribution disregard from the income assessment.

Contribution disregard #

The figure deducted from your household income assessment when calculating the assessed contribution. Found by calculating the amount of loan deducted from the maximum loan at a household income of £42,875. Currently £2,333 at home, £2,396 in London, £2,358 outside London and £2,380 overseas. (£42,875 - £25,000) / taper

Entitlement #

The loan figure SFE calculate based on your category, household income and course year.

Income assessment #

The amount to be deducted from the maximum loan for your household income. (Household income - £25,000) / taper

London loan #

Higher rate of maintenance loan available to students studying at the University of London or within the City of London or former Metropolitan Police district.

Main rate #

The maximum available loan for your category — the minimum (non-income assessed) loan plus the full income-assessed portion.

Taper #

The rate at which £1 of entitlement is removed based on household income. For example, a taper of £7.46 means that £1 will be taken from the income-assessed portion of the loan for every full £7.46 over £25,000 in household income.

Total assessed contribution #

The total amount considered a household contribution for a student. Must not exceed £6,210. Assessed contribution + contribution for supplementary support

 
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