Government benefits for domestic students during the COVID-19 crisis

At least temporarily, some domestic students are financially better off due to the government’s COVID-19 measures. This is due to increased income support payments and JobKeeper exceeding their likely pay if they had been working.

JobKeeper

Eligibility for JobKeeper is a two-stage process. First the employer has to be eligible, with a 30 per cent reduction in revenue for businesses with revenues below $1 billion, and a 50 per cent reduction for business with revenue above $50 billion. Most charities have a lower threshold of a 15 per cent reduction in revenue.

I have no direct data on how many students are employed in eligible firms, but student employment is concentrated in industries that we know have been hit hard by COVID-19 shutdowns.

Second, the student has to be an eligible employee. In the ABS Characteristics of Employment Survey for August 2019, about two-thirds of employed students aged 17-30 years who are studying full-time meet the criteria. They have either on-going employment (using the entitlement to paid sick leave proxy) or are casuals who have been with their current employer for 12 months or more. This analysis includes all students, not just higher education students.

[Update 25/4/20: The Treasurer has announced that full-time students aged 16 and 17 years will not be eligible for JobKeeper, adding an age condition that slightly affects my analysis.]

If these tests are satisfied, there is a flat payment from the government, but paid by their employer, of $1,500 a fortnight. This is likely to be much more than full-time students usually earn. According to the Characteristics of Employment Survey, their median earnings are $320 a week, or $640 a fortnight. JobKeeper is likely to more than double earnings for eligible students until it expires on 27 September 2020.

Student income support

As of 30 June 2019, 224,500 students were receiving a student income support payment, of whom 180,000 were higher education students. Enrolment data is not released in a way that lets me easily calculate receipt rates, but that number is equivalent to about 25 per cent of full-time higher education students or 31 per cent of undergraduate students.

For six months from 27 April, student income support recipients will, in addition to normal payments, receive a fortnightly $550 Coronavirus Supplement.  This is a big increase on normal payments, which continue. For example, a single student living at their parent’s home normally gets $304.50 a fortnight. They same people previously received a $750 Economic Support Payment. 

These added payments and the weak student labour market should increase student income support recipient levels. These have trended down in recent years for reasons that need further exploration. But one theory is that, with the student labour market being reasonably strong, work was more attractive than filling in Centrelink forms for the small sums of money on offer. Centrelink bureaucracy will remain unappealing, but the cost-benefit calculation has changed significantly for six months.

The same person can claim Youth Allowance and JobKeeper. However, JobKeeper payments count in the Youth Allowance income test and would reduce the regular fortnightly payment to zero. A Parliamentary Library source suggests that income support recipients with a zero payment may still get the $550 Coronavirus supplement, but I have not found direct confirmation of that from official websites.

JobSeeker (formerly Newstart)

Full-time students cannot receive the JobSeeker unemployment benefit (the rebranded Newstart). However, part-time students can receive it if they are looking for work. In the ABS project to link social security and census records for the 2011 census, 4.5 per cent of university students with linked records were receiving Newstart, rising to 10.5 per cent of part-time students. However, most records were not linked and I don’t know enough about this survey to say whether the linked sample is biased. In the 2017 Universities Australia survey of student finances, 7 per cent of the sample received Centrelink benefits other than student income support.

The usual payment for JobSeeker is $612 a fortnight for a single person without children (though many recipients receive other benefits as well). They too will get the $550 fortnightly Coronavirus Supplement until late September.

Conclusion

The generous treatment of domestic students contrasts with the very harsh treatment of international students. However, domestic students will come crashing back to reality in late September.

 

 

 

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