It has become clear that under current legislation student loans are written off on bankruptcy. I have, therefore, instructed the Student Loans Company (SLC) to pay back student loan repayments to bankrupt student loan borrowers.This issue came to light during the passage of the Enterprise Bill in Parliament last year. Prior to that, we believed that bankruptcy had been ruled out in legislation as grounds for write off of student loans.We have announced in the Higher Education White Paper that we will be amending our legislation so that graduates will have to continue repaying their student loans, even if they declare themselves bankrupt, and we hope to do so as soon as possible.One hundred and ninety eight borrowers have continued to repay their student loans after notifying the SLC that they have declared themselves bankrupt. The SLC have collected a total of around £75,000 from these borrowers and will now return this to them, together with interest compensation.Government policy is, and always has been, that student loan debt should not be written off with bankruptcy. Graduates should not see bankruptcy as an easy route to repaying the money they have borrowed through the generously subsided student loan system. Bankruptcy could have an adverse affect on graduates' employment prospects, future earnings, credit rating and their ability to take out loans and mortgages.
The Minister for Lifelong Learning and Higher Education