---

Dept for Education and Skills

Answer

Mrs. Calton: To ask the Secretary of State for Education and Skills how many former students have outstanding loan accounts; how many of these are being repaid; how many are not being repaid because of the low income of the borrower; and what factors, apart from income, are taken into account when repayment is demanded. [153825] Alan Johnson: Most borrowers who started their course from the 1998/99 academic year will repay income-contingent loans. Loans for those who started their course before 1998/99 are repayable on a mortgage-style basis. There are differences in the repayment terms for the two types of loan. Borrowers enter repayment status in the April following graduation or otherwise upon leaving their course. There were 1,492,000 student loan borrowers in the United Kingdom in repayment status at the end of the end of the financial year 2002-03. Of these, some 815,000 borrowers had mortgage-style accounts that were up to date with repayments, or income-contingent accounts which are repaid through the tax system. Some 559,000 borrowers who had mortgage-style loan accounts which they were liable to repay had been granted deferment because their income was below the threshold (£21,022 per annum from 1 September 2002, £21,364 from 1 September 2003). No repayments are collected from income-contingent borrowers whose income falls below £10,000 per annum. Repayments of income-contingent loans are collected through the tax system and are notified to the Student Loans Company after the end of the tax year for reconciliation with their records. Therefore the data on the number of borrowers with income-contingent loans, where repayments have not been deducted because the borrower's income is below the repayment threshold, are not yet available. The income-contingent loan repayment system takes into account whether the borrower is in receipt of disability related benefits, and whether they are covered by the Repayment of Teacher Loans scheme. Loans are cancelled: when the borrower reaches 65 years of age; if the borrower is in receipt of a disability related benefit and is permanently unfit for work; or if the borrower dies. The mortgage-style loan repayment system takes into account whether the borrower is in receipt of disability related benefits; whether they are covered by the Repayment of Teacher Loans scheme; and the number of loans taken out. Loans are cancelled: after 25 years or when the borrower reaches the age of 50 (60 if the borrower was aged over 40 when he/she last borrowed), whichever is the earlier; if the borrower is in receipt of a disability related benefit and is permanently unfit for work; or if the borrower dies.

Secondary information

Type

Written question

Reference

418 c209-10W; 153825

Session

2003-04

Subjects

Personal income Low incomes Loans Repayments Students

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk