Public Accounts Committee
HC 558, First Report of Session 2014-15 - Report, Together with Formal Minutes Relating to the Report
- House of Commons - Business, Innovation and Skills Committee
- TSO (The Stationery Office)
'Student Loans (HC 558)' finds that a persistent record of inaccurate debt forecasting and a failure to collect student loans effectively threatens the continued existence of the current student loans model.
The Committee calls for an urgent review of the student loans system and expresses concerns that the Chancellor's removal of the cap on student numbers may result in a multi-billion budget gap.
Under the current system, for students residing in England, the Government loses around 45p on every £1 it loans out. The Department for Business, Innovation and Skills (BIS) has a record of miscalculating just how much it will lose on a student loan at the point it pays out.
This persistent error, resulting in the collection of £111m less than expected in 2011-12, had been compounded by the Government's refusal to adopt a range of improvements suggested by independent forecasters.
There is a lack of rigour in the collection of student debt; graduates working abroad find it too easy to avoid making payments and collection targets set for the Student Loan Company (SLC) by the BIS are not fit for purpose. The SLC should be set an annual target for money collected and require it to explain any shortfall.
The Government should also look to examples of effective student debt collection, such as in the USA. The mooted sale of the income-contingent loan-book could bring a significant windfall to the public purse but of only £2 billion, not the £12 billion the Government expects.
|Format||Paperback||Published||22 Jul 2014|
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