Locked out of Youth Allowance — NUS releases report on student poverty in Australia

The report found that hundreds of thousands of 18 to 21 year-olds are being left in poverty by the inaccessibility and inadequacy of government payments.

The National Union of Students (NUS), the peak representative and advocacy body for Australian tertiary students, has today released their report on student poverty in Australia. Prepared in partnership with the Foundation for Young Australians (FYA), the report calls for the age of independence to access Centrelink to be lowered from 22 to 18, and for Youth Allowance to be raised above the poverty line to at least $88 per day.

The NUS argues that “right now, the Australian Government’s Centrelink system provides essential income support for people over 22, but is failing hundreds of thousands of 18 to 21 year-olds denied access to financial support. All young people should be able to study with a safety net to pay for rent, books, and food.”

The report outlines the results of a survey of 673 current and former students impacted by the Centrelink Age of Independence rule and payment rates, and includes primary data from the Department of Education. All polling and research took place in 2022. 

It builds on previous research and reports, including Universities Australia’s 2018 Student Finances Survey which found that one in seven full-time domestic undergraduate students have regularly gone without food or other necessities due to a lack of finances. For Aboriginal and Torres Strait Islander students, this proportion rises to one in four.

Impact of Student Poverty

The NUS report found that living in poverty had a wide range of profoundly negative effects on the lives of students. This includes an increase in housing instability, which exacerbates existing crises such as domestic violence.

Student poverty was also found to have a severe impact on risk of depression and psychological distress, which is particuarly concerning given that cost of living pressures are currently the highest risk factor for suicide according to Suicide Prevention Australia.

Of students who were unable to access Youth Allowance, 60 per cent noted that it had a negative impact on their academic achievement, 35 per cent said that it impacted their job prospects, and 23 per cent had seen impacts on their physical health.

“The biggest barrier to higher education at the moment is this welfare system that doesn’t support students,” said NUS President Georgie Beatty.

The impact of student poverty intersects and compounds markedly with other forms of structural inequality and disadvantage.

The report finds that LGBTQIA+ students are disproportionately excluded from Youth Allowance, and that almost 45 per cent of surveyed students with a disability who applied for Youth Allowance were determined to be ineligible under current rules.

The Disability Support Pension (DSP) is currently higher than the maximum Youth Allowance payment ($667 compared to $530), and in most instances students are unable to qualify for the DSP if they study more than 30 hours per week. Consequently, the NUS’ report finds that students with a disability are financially penalised for studying a full-time course load.

13 per cent of surveyed students rejected from Youth Allowance also noted that it impacted their caring responsibilities, as they had lower financial security and were unable to dedicate as much time to care.

Of surveyed students, 30 per cent of Aboriginal or Torres Strait Islander (ATSI) students were determined to be ineligible for Youth Allowance or ABSTUDY payments. This is particularly concerning given that Universities Australia’s 2018 report found that almost 28 per cent of ATSI students had reduced their course load due to financial hardship, with 16 per cent deferring their studies entirely.

The impact of student poverty is additionally not fully captured by this report, as many prospective students choose not to attend University or TAFE at all due to the perception and realities of financial barriers to study.

Access to Youth Allowance

The main focus of the report is on the inaccessibility and inadequacy of Youth Allowance in assisting students to cover their cost of living. 

The NUS found that the majority of Australian students aged 18-21 are excluded from Youth Allowance payments due to the age of independence being 22.

Youth Allowance and its predecessor, Austudy, was available to students over the age of 25 from 1997 to 2010, until the age of independence was gradually lowered to 22 by the Gillard Government.

The age of independence is the age at which young people are considered to be ‘permanently independent’ from their families by the Australian government. Below this age, students hoping to access Youth Allowance must prove their independence to the government or be considered dependent on their parents, which means their payment can be reduced based on parental income. The process of proving this independence is often arduous and requires a high burden of proof and large amounts of administrative work.

This administrative work and inequity of Youth Allowance is highlighted by the NUS’ report, with students sharing statements on the hardships that they have faced.

Tara, aged 21, describes being unable to access Youth Allowance due to being considered dependent on her parents. “The only reason I was not eligible [for Youth Allowance] was because my parents earn over the threshold, but it’s not like I see that money or receive their income. My parents are smokers and drinkers so a lot of their money goes there, not to me. I understand that Centrelink’s logic is that I receive support from my parents, but I don’t.”

“The Australian Government can change Centrelink’s Age of Independence rules, so all students have equal access to higher education. Students should be able to put food on their table, rent a stable home and enjoy studying with their friends, with a safety net of knowing Youth Allowance is there if they find themselves out of work,” Billy Zimmerman, NUS Welfare Officer stated.

Many students surveyed also noted that it would be unsafe to declare independence from their parents, as it would require a Statutory Declaration confirming family violence or an unsafe home environment. 90 per cent of surveyed students who said that a lack of access to Youth Allowance impacted their experience of family or domestic violence were LGBTQIA+.

Gaining proof of family violence is incredibly difficult, and creates an additional burden and danger for young people trying to escape unsafe situations. This difficulty is highlighted in a survey response that describes how “the scariest part of it was that I needed to get verification from my parents that it was unreasonable for me to live at home. Which is a ridiculous barrier that people face in accessing Youth Allowance, often when it’s not safe for people to live at home it’s difficult to get that proof and people usually won’t even have a relationship with their parents.”

An anonymous survey respondent also shared that “if the Age of Independence had been lower, I would have been able to get away from my abusive parents at a younger age instead of waiting until I was 22.”

The NUS told Honi in a statement that “proving your independence can be a nightmare; students for whom it is unsafe to live at home are directed by Centrelink to provide a Police Report, Psychologists Statement, or most concerningly a statement from the parents themselves who the young person is trying to get away from. This is at the extreme end of the scale but at every level, there are hoops and red tape students have to go through to get the basic support to survive. Changing the Age of Independence won’t solve every issue, but having 18 year olds automatically eligible for Youth Allowance would go a long way to helping many people.”

Almost 98 per cent of students surveyed by the NUS supported lowering the age of independence from 22 to 18.

The report notes that 22 is an arbitrary age which does not align with other Australian policies. The family tax benefit ends at age 19, and out of home care support in most states and territories ends at age 18. This creates a gap in which students who are not entirely supported by their parents between 18 and 22 are left without sufficient income support.

The low payment rate of Youth Allowance

Even when students are able to access Youth Allowance, it is often entirely insufficient to cover living expenses. Figure 1 shows that even the maximum Youth Allowance payment is well below the Henderson Poverty Line, and is also markedly lower than the (also inadequate) JobSeeker payment. The Henderson Poverty Line accounts for a single person with housing costs.

The current maximum daily rate of Youth Allowance is $13,790 annually, which is under 60 per cent of the Henderson Poverty Line. 

Despite this inadequacy, access to existing payments remains essential for students. The NUS’ survey included 121 respondents who were successfully able to access Youth Allowance payments. Of these students, the vast majority reported the positive impact that the payments had on their life and studies. It allowed them to afford safe housing and mental health support, as well as prioritise their studies while improving their job prospects.

Policy Recommendations

The NUS’ report makes a number of recommendations to policymakers on a path forward to improve the wellbeing of and outcomes for students.

Firstly, it recommends that the Government lowers the age of independence to 18 from 22, and raises student social security payments above the poverty line to at least $88 per day. This policy has been costed at $5.7 billion per year.

Secondly, the NUS recommends that Centrelink payments are indexed to the cost of living (as the Age Pension is), and that Commonwealth Rent Assistance is raised to reflect current rental prices.

Beyond the issues of Centrelink payments for students, the report makes further recommendations of government intervention to alleviate student poverty. The report recommends new policies across the housing sector to tackle rental and housing affordability in Australia, as students currently feel locked out of home ownership and priced out of the rental market.

The NUS also recommends the abolition of junior employee pay rates which entrench age-based discrimination, as 57 per cent of young people aged 20 and younger are currently earning below their relevant award wage. 

Research from the McKell Institute estimates that on average, a junior employee is paid $8,483 less annually compared to their counterpart in the same role who is over the age of 21. The abolition of junior employee pay rates is also estimated to have a positive increase between .03 per cent and .05 per cent of GDP.

Finally, the report recommends a review of the Disability Support Pension and the funding of further research into international student poverty, as international students are often excluded from the financial support available to domestic students.

Regarding future advocacy, the NUS told Honi that they are “planning to continue this campaign; we hope for more from the Labor Government and will continue to agitate inside of parliament and out of it to convince them to help students. The government has the power to instantly lift many out of precarious situations and must act.”

As anyone under the age of 22 who is married is considered independent, “on a more immediate level [the NUS] will be in Canberra during the budget lobbying MPs with the report and hosting a real wedding of 2 young people to show that the rules are ridiculous.” 

The NUS’ full report is available here.