Skip to main content

Students: Bankruptcy

Volume 487: debated on Tuesday 27 January 2009

To ask the Secretary of State for Innovation, Universities and Skills (1) how many students were declared bankrupt in each of the last 15 years; (249895)

(2) how many students have entered into individual voluntary arrangements since such agreements were introduced.

Provisions were included in the Higher Education Act 2004 to prevent student loans from being written off on bankruptcy. The numbers of students notifying the Student Loans Company of their bankruptcy declined from 2004 after the legislation came into effect. Currently student loans are not exempt from IVAs.

Borrowers who notified the Student Loans Company of their bankruptcy or IVA while studying1. England

Financial year

Bankruptcy

IVA2

1993-94

5

0

1994-95

0

0

1995-96

5

0

1996-97

0

0

1997-98

5

0

1998-99

10

0

1999-2000

15

0

2000-01

5

0

2001-02

15

0

2002-03

20

0

2003-04

70

0

2004-053

60

5

2005-063

30

0

2006-073

15

5

2007-083

15

0

1 Publicly-owned loans. Figures rounded to nearest 5.

2 IVA includes Trust Deed for students who moved to Scotland.

3 Since 2004 student loans are not written-off due to bankruptcy. From that time the number of students notifying the SLC of their bankruptcy has declined.

The Government's student finance package is designed to ensure that finance should not be a barrier to a higher education course. Student loans from the Government are not like commercial loans: interest is paid at the rate of inflation, so in real terms students only pay back what they borrowed. For income contingent loans available since 1998, repayment is linked to earnings and borrowers only repay if their earnings are over £15,000 and those taking out a student loan from 2006 have their debt cancelled after 25 years.