Chamber and committees

Student Loan Debt for ScottishDomiciled Borrowers, as at 31 March 2006

Source: Student Loans Company.

It should be noted that debtis calculated at the point of entering repayment (i.e. 31 March 2006) ratherthan at the point of graduation. Therefore, the majority of customers who have ceasedto be students in 2006 will not enter repayment until 2007 and we cannot providefigures for these students as yet.

The destination information currentlycollected gives details of graduates activities and location approximately six monthsafter graduating.

HESA have successfully piloteda longitudinal survey that aims to find out what graduates have been doing, overa longer period of time, since completing their studies. It will survey graduatesthree and a half years after graduation has been completed. The first full DLHELongitudinal survey will take place this winter. A sample of graduates from the2002-03 leaving cohort will be surveyed.

The FDG survey is currently carriedout by Scotland’s Further Education Colleges. The Scottish Funding Councilhas indicated that they are looking to implement a more standardised approach. Thiswill include internet access for students undertaking the survey. It is hoped tohave this structure in place next year, which would mean that students graduatingin 2007-08 would be the first to be influenced by this change.

Note: 1 – Scottish Office Figures.

Column 1 – The subsidy is thepayment made to the purchasing banks to cover the difference between the commercialrate of interest the banks would normally charge and the rate of inflation theyare required to charge by the regulations.

Column 2 – Payments are madeto the purchasing banks for loans which are written off due to age or death.

Column 3 – Shows payments madefor loans which are “repurchased” and returned to the government portfolio for reasonsof permanent disability or being medically unfit for work.

Column 4 - First loss claims,reimburse the purchasing banks for loans which become 24 months or more in arrears,as these loans no longer attract the interest rate subsidy.

Column 5 - First loss repaymentsare deducted from the total Executive payment as loan repayments can still be receivedafter the first loss claim is put in place, i.e. after the bad debt is written off.

Column 6 - Adjustments can bemade to the figures in respect of year-end reconciliations between what has beenpaid by the DfES and the devolved administrations. Adjustments can also be madeto reflect accruals and differences in spend across financial years.

Thereal rate of interest on student loans is zero, as the interest charge simply coversinflation. Therefore, any repayment made, no matter how small, would always resultin a borrower owing less in real terms.

If no repayments were made, theborrower would still owe the same amount in real terms.