Bill Esterson – 2015 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Bill Esterson on 2015-11-02.

To ask the Secretary of State for Business, Innovation and Skills, what recent estimate he has made of the predicted default rate of university maintenance loans.

Joseph Johnson

Student loans are not like a bank loan or credit card. Repayments do not have to made if the borrower’s income is below £21k. There is, therefore, no default rate as such, but a borrower who moves overseas and fails to repay even though they are earning over the threshold would be in default.

Maintenance loans are either repaid during the loan term, or written off after 30 years, or if the borrower dies or becomes permanently unable to work as a result of disability. Provision for the cost of future write offs is made in BIS accounts each year. This is known as the RAB charge.