Chamber and committees

There were two sales of student loan debt to the private sector: the first in 1998 and the second in 1999.

The following table shows the number of court actions raised against account holders UK wide to recover student loans sold to each debt owner. No breakdown of figures for Scotland is available.

Not all account holders will necessarily be graduates.

Debt Owner	Court Actions Raised Against Account Holders	Approx no. of Loans Sold to Debt Owner	Percentage of Court Actions Raised to The Number of Loans Sold
1	9,942	500,000	2.0%
2	1,147	500,000	0.2%

Source: Student Loans Company.

The Student Loans Company estimates that the total number of student loan debts, held by Scottish account holders, that have been written off since the student loans scheme began is approximately £1.5 million relating to approximately 770 loans. It is not possible to provide an annual breakdown of this figure.

Information on Scottish graduates who have been advised that they face court proceedings to recover outstanding student loans is not held centrally.

The number of Scottish student loan borrowers who have been declared bankrupt to 2003 is given in the answer to question S2W-6052 answered on 2 March 2004.All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at http://www.scottish.parliament.uk/webapp/search_wa.

The number declaring bankruptcy in 2004 is 1,541.

There is no statutory requirement for bankrupt students to notify the Student Loans Company of their status, so the figures given will not include all bankruptcies.

The following is a corrected answer (published on 25 October 2005); see below.

Nicol Stephen: The number of Scottish student loan borrowers who have been declared bankrupt to 2003 is given in the answer to question S2W-6052 answered on 2 March 2004. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at: http://www.scottish.parliament.uk/webapp/wa.search.

The number declaring bankruptcy in 2004 is 289.

There is no statutory requirement for bankrupt students to notify the Student Loans Company of their status, so the figures given will not include all bankruptcies.

This is a correction to the earlier answer to this parliamentary question given by Jim Wallace MSP on 28 February 2005. I have written to Ms Hyslop to say that the Student Loans Company have apologised for their mistake and that they have asked for their apologies to be passed onto Parliament. My letter has been lodged in the Parliament’s Reference Centre under bib number 37248.

The first debt sale was concluded in March 1998 being sold to Greenwich Natwest (GNW), a division of National Westminster, now Royal Bank of Scotland (RBoS). SLC were appointed to undertake the day-to-day administration. The original contract was for five years from March 1998 and SLC successfully negotiated renewal for a further five years administration period commencing March 2003. There are no variations in the contract.

The second portfolio was concluded in March 1999 and the purchaser was a consortium comprising Deutsche Bank, AG London and Nationwide Building Society. SLC were awarded a five year contract to administer the portfolio. The original contract expired in March 2004 and the debt owners took the decision to award the contract for administration to another agency. The key terms and conditions of the loan are all protected.

Loans have been an integral part of an affordable student funding system since 1990. We do, however, appreciate that some students from less affluent backgrounds may be concerned about accruing debt while they study. That is why, in 2001, the Executive introduced the non-repayable Young Student’s Bursary (YSB) to replace part of the loan to which eligible young full-time students from low-income backgrounds are entitled. This will reduce the level of debt which suchstudents would otherwise have on graduation.

I recently announced that, from 2005-06, the maximum annual support provided through YSB will be increased by 11% to £2,395. The parental income threshold has also been increased. These changes mean that approximately 3,000 additional students will now be able to receive the bursary and approximately 20,000 will receive the maximum bursary.

The amount of student loan that a graduate repays each month and the period of time over which repayments are made are linked to the level of the borrower’s income and the amount borrowed. Under the support arrangements introduced in 2001-02, many students who will be liable to pay the endowment when they graduate will have been eligible to receive the Young Students Bursary in place of part of their loan entitlement. Most liable graduates will have borrowed less under the current arrangements than they would have under the previous system. No student should have borrowed more.

Future repayments depend on a wide range or factors, and are therefore difficult to forecast. In the past year work has been carried out to improve the student loans repayment model. There has been extensive testing, though, as with all models, it will be subject to further analysis and refinement.

The table summarises the model’s results for the loan repayments, at different thresholds, from April 2006. From April 2005, the threshold will be £15,000.

Loan Repayments (to the Nearest £5 Million)

Threshold	2006	2007	2008
£10,000	75	105	145
£15,000	35	60	90
£19,000	20	35	55
£25,000	5	10	20

Note: Student loans are treated as outwith total managed expenditure, which means that the net costs are met by HM Treasury (gross student loan advancesless student loan repayments). This income is the repayment of a debtor balance within the balance sheet. This “income” (loan repayments) and the loan advances are shown in the Budget Act to meet the requirements of section 1 of the Public Finance and Accountability (Scotland) Act 2000. At the year-end these figures are reflected within the balance sheet and not within the Operating Cost statement.

The rate of interest applied to student loans is equal to the annual change in the retail price index. This is applied to maintain the value of the amount borrowed in real terms.

1990 - 9.8%.

1991 - 5.8%

1992 - 3.9%

1993 - 1.2%

1994 - 2.3%

1995 - 3.5%

1996 - 2.7%

1997 - 2.6%

1998 - 3.5%

1999 - 2.1%

2000 - 2.6%

2001 - 2.3%

2002 - 1.3%

2003 - 3.1%

2004 - 2.6%

The number of students aged 25 and over receiving support from the Student Awards Agency for Scotland has remained broadly unchanged since the introduction of a wholly loan based system of living cost support in 1999. This would suggest that potential mature students do not regard the current student loans arrangement as a disincentive.