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Undergraduate Bankruptcy

Volume 457: debated on Wednesday 7 March 2007

To ask the Secretary of State for Education and Skills how many undergraduate students resident in (a) Suffolk, (b) the East of England and (c) England declared themselves bankrupt in each year since 1997. (118654)

Available data are shown in the table.

Number of students1 with publicly-owned student loans who notified the Student Loans Company (SLC) of their bankruptcy, or individual voluntary arrangement (IVA) while studying2—Students domiciled in Suffolk, East of England government office region and England—Calendar years of bankruptcy or IVA 1997 to 2006

Calendar year

Suffolk3

East of England3

England4

1997

5

5

15

1998

5

5

15

1999

5

5

15

2000

5

5

15

2001

5

5

15

2002

5

5

10

2003

5

5

50

2004

5

10

105

2005

5

5

35

2006

5

5

15

1 Figures are rounded to the nearest five borrowers. There may be delays between borrowers becoming bankrupt and notifying SLC, therefore figures can increase over time, particularly for the most recent years. There may be some borrowers who do not notify the SLC of their bankruptcy, as the Higher Education Act 2004 included provisions to prevent student loans being written-off on bankruptcy. Students on postgraduate initial teacher training courses can be eligible for loans. The table covers all student loan borrowers, and therefore may include those who took out loans for postgraduate study in addition to those who were undergraduate students.

2 The table shows those who became bankrupt or made an IVA before or during the last academic year in which they took out a student loan.

3 Income-contingent loans only. Information on mortgage-style loan borrowers who are bankrupt or have IVAs is not available by local authority or government office region.

4 Mortgage-style and income-contingent loans.

5 Nil or less than five.

Source:

Student Loans Company

Media coverage of the issue of student loan borrowers declaring themselves bankrupt during the passage of the Enterprise Act 2002 may have contributed to the rise in bankruptcies in 2003 and 2004. In addition, one of the effects of the Enterprise Act itself was to reduce the period of discharge from bankruptcy from three years to one.

Provisions were therefore included in the Higher Education Act 2004 to prevent student loans being written off on bankruptcy. This may explain the subsequent fall. While borrowers who have become bankrupt remain liable to repay their student loans, they continue to benefit from the same terms as other borrowers, with repayments linked to income and no obligation to repay if their annual income is below £15,000.