Andrew Norton on student income support during the pandemic


Contrary to early expectations, domestic student finances improved during Covid-19

As Covid-19 hit universities resented their lack of JobKeeper support. International students suffered without federal assistance until mid-2021. But domestic students had a very different Covid-19 experience, as I argue in a new paper. Covid initially caused losses, but these were offset by increased government payments and labour market income.

The first lockdown, from March to May 2020, hit employed students hard. For tertiary students aged 24 years or less employment fell by more than 100 000. Other students kept their jobs but lost hours.

JobKeeper rules were not perfect for this group. A minimum age of 18 years for full-time students excluded a small percentage of undergraduates. Casual staff needed employment of 12 months or more. Despite these restrictions, I estimate that just under 100,000 students aged 24 and under were eligible for JobKeeper. In its first version, JobKeeper paid $750 a week, far exceeding the August 2019 median student labour market income of $340 a week.

Prior to Covid student income support was in decline, with fewer people receiving Youth Allowance and  Austudy. This quickly – although temporarily, as 2022 recipient numbers show – reversed itself as Covid hit. Between March and August 2020 the number of students receiving Youth Allowance increased by 66 000, to a total nearly a quarter higher than a year earlier.

With a decline in student employment more people met the income support personal income test. However, for dependent Youth Allowance, for students aged 21 years or less, there is also a parental income test. It is likely that student parents moving onto income support qualified more students for Youth Allowance.

Alongside the push factors of lost jobs was the pull factor of student income support being much more financially attractive than previously. Between April and September 2020 the Coronavirus Supplement more than doubled student income support fortnightly payments. The Supplement continued at lower levels until March 2021. Including a March 2020 economic stimulus payment, someone on student income support for the full year received over $9,000 more than they would have anticipated before Covid.

The most widespread and lasting student benefits of Covid came through the labour market. For students, a border closed to temporary migrants reduced competition as fiscal and monetary stimulus increased demand for labour.

In July 2021 the proportion of full-time tertiary students aged 24 years or less with a job reached an all-time high of 72.5 per cent. In the early months of 2022 employment rates were still around 70 per cent, 10 percentage points higher than usual for that time of year.

With student working hours also up, median weekly labour market income in August 2021 for full-time students aged 24 years or less was $440, $100 more than before COVID.

As temporary migrants return and the economy struggles with inflation the good financial times for students probably won’t last. But, contrary to early expectations, domestic student finances were improved by COVID-19.

Andrew Norton’s paper Tertiary student finances under COVID-19 is published by the ANU Centre for Social Research and Methods