Loop Hole Means Retirees on Pension Annuity Incomes get ‘Free’ University

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A free degree may sound like a thing of the past in the UK but that is not the case for the majority of the country's retirees. Research has shown that most of Britain's retirees are eligible for student's loans that they will never have to back, and many are taking advantage of this to study for a degree in later life.

Prudential Insurance group released figures showing that retirees in 2013 will have an average income of £15,300 per year from their pension annuities payments. This means the majority of retired Britons fall considerably short of the £21,000 threshold that must be exceed before student loan repayments are eligible.

With no age limit on tuition fee loans, which are paid directly to the higher education institution that the student is studying at, growing numbers of retirees are choosing to go to university. There is also no requirement on whether the course is taken full time or part time.

There is, however, an age limit of 60 years of age on maintenance loans, which are used to cover everyday costs of living, such as rent and food.

One such retiree is Mrs Armstrong, aged 63 years old when she graduated with a BA in English from Oxford University last year. Mrs Armstrong's pension annuity income is fixed comfortably under the £21,000 limit for the rest of her life so she need never worry about being eligible to repay her £27,000 of student loans.

Of her time studying as a retiree, Mrs Armstrong said, "when you're 18 it may seem a chore, but at my age it is a great pleasure."

As she lived in student accommodation at the time, Mrs Armstrong was also able to save more money through council tax exemption which students are eligible to.
The growing trend of increasing numbers of retirees undertaking graduate degrees is likely to continue, greatly fuelled by the fact that a high proportion of retirees will never fall eligible to repay student loans.

"Annuity rates are suppressed to all time historic lows. With extending life expectancies and a suppressed global economy, even the best annuity rates are unlikely to give incomes in excess of £21,000 per year unless the retiree has a very substantial pension pot saved, far above the national average," said Gregory Smith, annuity rates correspondent at the Banking Times.

One deal-breaker for retirees is whether they already have a higher-level qualification. Those who already have completed a degree at a UK university are unlikely to be eligible for tuition fee loans, say Student Finance UK.

With a sizeable national debt and deficit racked up by previous generations, many of Britain's younger students may have reason to feel aggrieved that effectively free degrees are still available to a portion of the population.

It was the national debt crisis that was used by politicians to justify the radical increases in student financial contributions to their own education - a debt that younger generations have effectively inherited.

"I think it's disgraceful that the previous two generations have had access to free higher education and we are expected to pay such massive fees," said a young undergrad who wished to remain anonymous.

It remains unclear to what extent the financial burden of retirees borrowing student loans that they never repay will be.

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