Government cracks down on missing student loan repayments
BIS estimates that 11.3% of student loans, currently worth £8.3bn, are currently owed by people who have failed to meet expected repayments, whose status is unverified, or who are in arrears.
Jo Johnson, the Universities Minister, announced a crackdown encompassing stronger enforcement, alongside measures to improve monitoring and forecasting within the Student Loans Company.
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“It is vital that the repayment process is robust, convenient for borrowers and working efficiently to ensure the sustainability of the student finance system and value for money for the taxpayer,” Mr Johnson said in a written statement to Parliament.
“In the interests of fairness to both the taxpayer and to borrowers that meet their obligations, we will be tougher on those who do not.
“We will take stronger action to trace borrowers including those overseas, act to recover loan repayments where it is clear that borrowers are seeking to avoid repayment, consider the use of sanctions against borrowers who breach loan repayment terms and, if necessary, prosecute.
“This approach is fair for borrowers and good for the effective management of public money, providing value for the taxpayer and helping to ensure that the student finance system remains on a sustainable footing.”
It is estimated that £457m is missing from people living abroad.
Among the specific changes, the Government is looking to set up a “data sharing exercise” with Australia, the most popular overseas destination for people who took out student loans in Britain.
The strategy also promises a “zero tolerance” approach for anyone deliberately avoiding repayments or perpetrating fraud.
“We want to do more to maximise recovery of money due, going further than we have in the past to challenge persistent loan repayment avoidance, and if necessary prosecute.”