PARLIAMENTARY WRITTEN QUESTION
Students: Loans (21 March 2023)

The repayment of student loans is governed by the Education (Student Loans) (Repayment) Regulations 2009 (as amended).

Student loans have more favourable terms than commercial loans and carry significant protections for those making loan repayments, including for lower earners and borrowers who experience a reduction in their income. Borrowers are only liable to repay after leaving study when earning over the relevant repayment threshold. At any time, if a borrower’s income falls below the relevant repayment threshold, or a borrower is not earning, their repayments stop. Any outstanding debt, including interest accrued, is written off after the loan term ends (or in case of death or disability) at no detriment to the borrower. There are no commercial loans that offer this level of protection. If, at the end of the year, the borrower’s total income is below the relevant annual threshold, they may reclaim any repayments from the Student Loans Company made during that year.

Repayments are calculated as a fixed percentage of earnings above the relevant repayment threshold. This is currently £27,295 for a post-2012 undergraduate loan and £21,000 for a postgraduate loan. These do not change as a result of the interest rate charged, or the amount borrowed.

Due to the unique nature of student loans, they are exempt from the Consumer Credit Directive and are not subject to regulation by the Financial Conduct Authority. Student loans, along with other specific debts, are non-qualifying debts and are therefore exempt from the Debt Respite Scheme (Breathing Space) which scheme in any event provides for a moratorium not a payment holiday. Student loans are non-provable debts in bankruptcy since 2004, and therefore repayments must continue to be made by the student.

Maximum tuition fees, and the subsidised loans available from the government to pay them, remain at £9,250 for the 2022/23 academic year in respect of standard full-time courses. We are also freezing maximum tuition fees for the 2023/24 and 2024/25 academic years. By 2024/25, maximum fees will have been frozen for seven years. The department believes that a continued fee freeze achieves the best balance between ensuring that the system remains financially sustainable, offering good value for the taxpayer, and reducing debt levels for students in real terms.