Foreclosures, bankruptcies, tax liens and repossessions within the past five years can all lead to a PLUS loan being denied.
State and local governments are also cutting jobs to close large budget gaps caused by the drop in property taxes as repossessions rise and housing transactions remain at a low level.
Welfare reforms such as the bedroom tax contributed to an 18% rise in repossession actions by social landlords in 2013-14, a trend expected to rise as arrears increase and temporary financial support shrinks.
Conservative policies such as the 'bedroom tax' have contributed to an 18 per cent rise in repossessions by social landlords, including councils.
When accompanied by individual measures such as an expansion to the programme to find work for the unemployed, tax credits to top up incomes where people needed to reduce hours, limit the scale of repossessions.
"A tax-free lump sum now could be a real benefit, perhaps even a home-saver in cases of impending repossession," says David Thurlow of independent financial advisor (IFA) Atkinson Bolton Consulting.
In Haringey, north London, which collected 80% of the council tax due from benefit claimants, hundreds of households have been taken to court to recover unpaid tax – with non-payers threatened with bankruptcy, repossession and ultimately prison.
Raise the allowances substantially to take far more people out of tax, and spend in all the other ways available, such as higher winter fuel allowances and help for those falling victim to foreclosure and repossession.
Laws on repossession differ by state.
