THE PROS AND CONS OF SIGNING ON AFTER GRADUATION
Are you struggling to find work, running out of cash – and considering signing on for Jobseeker’s Allowance? Is the money you get worth the hassle of applying? And can you do internships (either paid or unpaid) while you claim JSA? In this article we take a look at what Jobseeker’s Allowance benefits are available to graduates, and weigh up the pros and cons of making a claim…
WHAT IS JOBSEEKER’S ALLOWANCE?
Jobseeker’s Allowance (JSA) is a financial benefit provided by the government to people who are either not currently in employment, or who are only working a small number of hours – but who are actively searching for work. It’s designed to relieve some of the financial stress caused by being out of work. So, if you are fresh out of university, struggling to land your first graduate role and running out of cash fast, it’s a helping hand you should consider taking.
Anyone who’s struggling financially can apply. However, how much money you’ll receive will depend on a number of factors, including your age, whether you’re in a couple, what work you’ve done in the past few years, whether you have any savings, and whether you are currently earning anything at all. Due to a shake-up of the benefits system, there are actually four types of financial support available – two ‘old system’ benefits and two ‘new style’ benefits:
‘New Style’ JSA
Note that the first two on the above list are actually being phased out and replaced with the last two on the list. In fact, you can only make a claim for the Contribution-based JSA or Income-based JSA if you receive something called the severe disability premium (and meet the other eligibility criteria). If this is you, it is likely you have already been made aware of what employment-related benefits you are entitled to, and this is probably not the advice article you need.
For the purposes of this post, we will assume that most readers do not receive the severe disability premium – in which case, it’s very likely that if you do make a claim for financial support, it will be for the ‘New Style JSA’ and/or Universal Credit. Let’s take a look at which one is right for you…
NEW STYLE JOBSEEKER’S ALLOWANCE (JSA)
The New Style jobseeker’s allowance is provided for up to 182 days (six months) to those who have been employed and paid enough Class 1 National Insurance contributions over the past 2-3 years. You’ll have to also meet other eligibility criteria, which includes: being aged 18 or over; not in full-time education; unemployed or working less than 16 hours per week; and actively searching for work. You must also have the right to work in the UK and not be claiming the severe disability premium.
How much you receive is solely based on your personal circumstances. If you have a partner, their income or savings won’t be assessed or affect your claim.
TIP! If you are a recent graduate and you haven’t worked a lot during your years at university, you might not have enough Class 1 National Insurance contributions to make you eligible to claim the New Style JSA. In that case you’ll need to make a claim for Universal Credit.
Universal Credit was introduced in 2013 and has slowly replaced a number of other benefits (including the Income-based JSA and Housing Benefit). It is a payment provided to those over the age of 18 who are out of work or on a low income and is means-tested (not based on your National Insurance contributions or your recent employment). To claim it, you must be: over 18; out of work (or on a low income); living in the UK; and have less than £16,000 in personal savings.
Note that unlike the New Style JSA, it’s not just your personal circumstances that are assessed as part of your claim – if you have a partner (see below for definition), their income and savings will be taken into account too (so you’ll need a combined savings of less than £16,000).
With Universal Credit there are no limits on how many hours you can work (unlike JSA, which is 16 hours maximum). However, the more you earn, the more your payment reduces. You can use a benefits calculator to work out how much you can get.
HOW MUCH MONEY WILL YOU GET?
How much you’ll get will depend on factors such as your age, earnings and/or savings. (So, if you pick up some bar work or still have some student loan money left over this can affect how much allowance you’ll receive).
Jobseeker’s Allowance is usually paid every two weeks. Here is the maximum amount you could receive – per week – when you make a claim (for any type of JSA):
Aged 24 or under: £58.90
Aged 25 or over: £74.35
Couples over 18: £116.80 per couple
Universal Credit is usually paid on a monthly basis. Here is the maximum amount you could receive – per month – when you make a claim:
Under 25: £342.72
Over 25: £409.89
Couple under 25: £488.59 per couple
Couple over 25: £594.04 per couple
Don’t forget, you might not receive the maximum amount.
NOTE! The New Style JSA can be claimed alongside Universal Credit (if you meet the eligibility criteria for both, that is). If you apply for both, the JSA amount you are eligible for will be deducted from the Universal Credit amount you receive.
WHAT CONSTITUTES A COUPLE OR PARTNER?
The government defines a couple as two people who are in a relationship and living in the same household together. It doesn’t matter if you aren’t married, are living with other people (i.e. in a student flat-share), or paying rent separately to a landlord – if you’re in a relationship and living under the same roof, you’ll be classed as a couple.
If you have a boy/girlfriend who stays over a couple of nights a week, but has their own home they pay rent/ bills on, then you won’t be classed as a couple.
Being in a couple won’t affect your New Style JSA claim as it doesn’t take into account your partner’s income/savings. However if you are in a couple you’ll need to make a claim for Universal Credit as a couple. Your combined income/savings will then be assessed to determine how much you can claim.
CLAIMING BENEFITS WHILE DOING INTERNSHIPS
If you’re doing a paid internship and working over 16 hours a week, then itâ€™s likely that your Jobseeker’s Allowance will be reduced (either partially or completely) – as you’ll be earning a wage. However, you might be able to claim other forms of support if your income is really low e.g. Universal Credit or working tax credits.
If you are doing an unpaid or expenses-only internship (which you shouldn’t be, as your employer is probably breaking the law!) you won’t be eligible for benefits as you will not be actively searching for work, and fully available for interviews.
Those familiar with the government’s various ‘back to work’ schemes may spot a double standard here. For example, one scheme open to young job seekers involves up to 30 hours per week of unpaid ‘work experience’, which looks very much like a job or internship to us. Hmm.
There was a famous case in 2012 involving a geology graduate called Cait Reilly. She had an unpaid internship lined up at a museum, but was told she could not claim Jobseeker’s Allowance while doing that. Her Jobcentre Plus told her that she could, however, go and work at Poundland in a work placement organised by them… where she did unpaid shifts on the shop floor. Reilly challenged the Department of Work and Pensions and eventually won on a technicality – but this remains a murky area with inconsistent logic.
*HAVE AN UPDATE TO SHARE? If you manage to claim JSA or Universal Credit while doing a paid or unpaid internship that you set up yourself, please contact us so we can amend this article. Thank you!
THE PROS OF CLAIMING JOBSEEKER’S ALLOWANCE/UNIVERSAL CREDIT
There are many good reasons why graduates should consider making a claim for Jobseeker’s Allowance, including:
1) The extra money comes in handy. It’s not a long-term solution, but while you are between jobs, an extra few hundred pounds a month can help you with your rent, bills and food costs. It’ll save you from having to eat into any savings you might have, take out a loan you canâ€™t afford where youâ€™ll pile up interest, or call on the Bank of Mum and Dad for help (not that there’s anything wrong with doing that, if you’re lucky enough to have parents who are able to help).
2) Free prescriptions. There are many added benefits of being on Income-based JSA or Universal Credit, such as free prescriptions and free dental care through the NHS. This means you don’t have to sacrifice your health to pay for other important things.
3) Discounted council tax. If you’re claiming JSA, you may be eligible to get up to 100% discount on council tax (depending on where you live) and access to free legal advice. If you claim Universal Credit, you may also be able to get support with your rental costs in addition to your monthly credit payment.
4) Help with finding a job or work experience. For obvious reasons, the government wants you to find work as soon as possible. So they offer a wide range of ‘back to work’ schemes, including: work experience placements (lasting 2-8 weeks); work trials (lasting up to 30 days); and volunteering opportunities. They may also support you if you want to start your own business.
5) Discounted travel. If you have been receiving Jobseekerâ€™s Allowance or Universal Credit for over three months, you may be entitled to a 50% discount on selected rail and bus tickets, including the Tube if you’re in London.
6) Routine. You are required to look for work, and by doing this, you can get yourself into a routine.
7) National Insurance credits. As a young graduate just starting their career, claiming a pension might be the last thing on your mind. But it’s important to think about the future. Whilst you aren’t paying National Insurance tax, you can fill in the gaps with National Insurance credits, an automatic add-on if you receive JSA. This means that your future state pension benefits wonâ€™t be affected if you are not able to pay enough tax right now.
8) You don’t have to pay your student loan debt. You only start paying off your student loan when you are earning £372 per week (Plan 1) or £511 per week (Plan 2). As your benefits won’t be that much, you won’t have to make any student loan repayments for now.
THE CONS OF CLAIMING JOBSEEKER’S ALLOWANCE/UNIVERSAL CREDIT
1) It isn’t that much money. Unless you’re living with your parents, you’ll still struggle to make ends meet each month.
2) You’ll have to meet with your Job Centre coach every two weeks to ‘sign on’. During this meeting, your coach will grill you on how active you’ve been in your job search and what jobs you’ve applied for. They can be stressful if you’ve had setbacks during that period, such as difficulties with motivation, or with your mental health.
3) Stigma. There is no reason to feel this, but some claimants are ashamed of signing on. It’s important not to see claiming benefits as a sign of failure. The graduate market can be brutal and there will be lots of other graduates who are in a similar position to you. And it won’t last forever – it’s just a stop-gap solution while you work on your grand plan!
4) Pressure to look for jobs outside your chosen sector. Unfortunately, it’s quite common for graduates to report that the staff at their local job centre don’t take enough care to match them with roles that utilise their education effectively. It can seem like they are trying to shoe-horn you into any role they can, to get you off their ‘unemployable’ list. This can be really frustrating and demoralising, when you’ve spent the past three or more years studying really hard for a career in a particular field or industry.
HOW TO APPLY FOR JOBSEEKER’S ALLOWANCE/UNIVERSAL CREDIT
If you decide the pros outweigh the cons (and they really do if you’re struggling for money), then you can submit a claim online for either Jobseeker’s Allowance and/or Universal Credit. Once you;ve submitted your claim, you’ll be contacted to discuss the next steps.
It’s important to remember that once you’ve made a claim for JSA, you must inform Jobcentre Plus as soon as your circumstances change. If you’ve made a claim for Universal Credit you can report a change by logging in to your online account. A change of circumstances can mean anything from starting work, moving in with a partner, going into hospital, or going abroad. The full list of reasons can be found on the government website.
BEWARE! When interacting with the benefits system, don’t be tempted to pretend you forgot to mention something important, or that you made a mistake. If you fail to report a change to your circumstances promptly or fib on any part of your application you could face a penalty charge or even be prosecuted. We know this is not a great moment in your life, but for goodness’ sake don’t make it worse!
* ARE YOU CLAIMING JSA OR UNIVERSAL CREDIT?
What are the benefits — and are there any down-sides? If you’re eligible but aren’t claiming, what’s stopping you? Have we missed anything from our guidance above? Have your say below…