Published on February 25, 2014 | by Callum McCarthy


Students run away from loan

Woman holds purse and one pence piece

Almost half of all student debt owed in the UK might not ever be paid back.[Francis Wilmer]

Almost half of all student debt owed in the UK will never be paid back as students continue to find ways to outrun the Student Loans Company (SLC)

A report by the Public Accounts Committee says that the SLC have no information on almost 370,000 students that should be repaying their loans, and neither SLC or the government are doing much to investigate the matter.

In addition, over three ­quarters of overdue payments from students living abroad have now been outstanding for over a year. The government is said to have no strategy to recover the money.

Labour MP Margaret Hodge, who chairs the committee, said that authorities are “in the dark” about whether these loans will ever be paid back, adding that former students had simply “slipped out of contact.”

She added: “(SLC) knows very little about British graduates who live abroad or about graduates from the EU who have since left the country. Will they ever pay back their loans? The Student Loans Company simply doesn’t know.”


The Government estimates that the total amount of unpaid student loans will create an astonishing £80 billion black hole in the UK’s budget by 2042, but the PAC says that even this is an underestimation.

“We don’t have confidence in those figures,” Hodge said. “We think that the value of student loans never to be repaid could be even higher – because the Government consistently overestimates what’s due to be repaid by some 8 per cent.”

The report recommends that the Government and SLC must show “more rigour” in collecting debts from students, claiming that the current approach “just isn’t tough enough.”

The Government has also been told to share data between departments in order to track down borrowers, including information from health records and welfare offices.

But regardless of how tough SLC gets on evasive borrowers, students who are willing to repay may never earn enough to do so. UAL students from the UK and EU currently borrow £9,000 a year to cover their tuition fees, but are only made to repay once they are earning an annual salary of £21,000 or more.

Living abroad

One student who wished to remain anonymous told Arts London News: “I plan to be abroad a lot. To be honest, I’d be surprised if I end up in a position where Student Finance sees any of this money back in their pockets. I’ve been ripped off big style.”

Joanna Penso, who studies BA Fine Art at Chelsea, believes it will be years before she has to even think about repayment. “It’s such an impossible amount of money,” Penso said. “I can’t see it happening for at least ten to 15 years after I graduate. ­ That’s if I do eventually start earning enough money to start paying back my loan. Doing a fine art course and aiming to be an artist is not a very clear path.”

“I plan to be abroad a lot. To be honest, I’d be surprised if I end up in a position where Student Finance sees any of this money back in their pockets.” UAL student

But according to National Union of Students Vice-­President Rachel Wenstone, students will still end up forking out one way or another.

She said: “Graduates now stand to pay back twice, through their student loan repayments and as taxpayers confronting the spiralling costs of this ill­-considered scheme.”

“Forcing debt onto students as a way of paying for universities is an experiment that has well and truly failed. We now need to see serious thought about moving the system away from this unsustainable funding burden,” she added.


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