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Students: Loans

Volume 487: debated on Wednesday 11 February 2009

To ask the Secretary of State for Innovation, Universities and Skills how many people defaulted on student loan repayments in each of the last five years; and what action was taken in relation to such people. (255024)

The data are shown in the following table.

Student loan borrowers in arrears status at the end of each financial year1, England

2005-06

2006-07

2007-082

Income-contingent loan borrowers overseas in arrears

200

400

500

Mortgage-style loan borrowers in arrears3

85,800

83,800

81,900

Total borrowers in arrears3

86,000

84,200

82,400

1 Figures rounded to nearest 100. Consistent information is not available for earlier years.

2 Provisional.

3 Mortgage-style loan borrowers with accounts in more than one status may be counted more than once. Figures exclude mortgage-style borrowers deferring repayments due to income below the repayment threshold with arrears on their accounts. In March 2008, there were 6,500 borrowers in deferment with arrears.

Source:

Student Loans Company.

Student loans taken out since 1 September 1998 have income-contingent repayment where borrowers repay at a rate of 9 per cent. of earnings above £15,000, usually collected by employers alongside income tax and national insurance contributions. It is not normally possible to default on these repayments, except where a borrower moves abroad and repayments are made direct to the Student Loans Company. In these cases, the company traces the borrowers and enforces the debt.

Borrowers with the older mortgage-style loans repay instalments to the Student Loans Company whenever their annual income exceeds the repayment threshold, currently £25,936, usually through direct debits. The company takes a number of steps to trace borrowers who are not repaying and to bring their accounts into order, and—as a last resort—will take cases to court. Exceptions are made for some vulnerable borrowers.