HC Deb 04 December 1995 vol 268 cc119-20W
Mr. Don Foster

To ask the Secretary of State for Education and Employment when her Department asked the Contributions Agency to assess the feasibility and cost of collecting student loan repayments using the national insurance system on behalf of the Student Loan Company and the proposed private sector scheme; what costs were quoted for the first and subsequent years of operation and what these costs represent as a percentage of the total costs of running the social security deductions system; and if she will make a statement. [3615]

Mr. Bryan Davies

To ask the Secretary of State for Education and Employment what discussions her Department has had with officials of the Department of Social Security regarding the use of the national insurance system to collect student loan repayments. [4014]

Mr. Forth

My officials, with the assistance of other Government Departments, haye looked at this option on a number of occasions. There are fundamental objections of principle to collecting repayments via the Contributions Agency or Inland Revenue. Any such scheme would have significant implications for both employers and the collecting agency, in addition to the operational costs that the Student Loans Company would still incur in issuing and monitoring loans. For these reasons, no detailed analysis of the cost has been made.

Mr. Davies

To ask the Secretary of State for Education and Employment if students who have been declared bankrupt will remain eligible for subsidised loans made by private sector lenders under the proposed reforms of student loans provision. [3923]

Mr. Forth

The Education (Student Loans) Act 1990 does not specifically prevent students classified as bankrupt from being eligible for a loan. Private lenders, who would bear a large share of the risk, would be free to accept loan applications from students, or not.

Mr. Davies

To ask the Secretary of State for Education and Employment if it is her policy that private sector levels of subsidised student loans should be permitted to shorten the current loan repayment period if overall public sector subsidy per loan is held constant.[4054]

Mr. Forth

Contracts with the private lenders will set out minimum standards to be met to be eligible for subsidies. This will include a requirement that interest payments are no higher than the rate of inflation as measured by the retail prices index.

If a lender wishes to offer different terms, including a shorter repayment period and lower interest rates, that is a matter between it and the borrower. Our contracts will ensure that, in such cases, the public subsidy paid will have the same overall value to the taxpayer and to the student.

Mr. Davies

To ask the Secretary of State for Education and Employment what is her Department's estimate of the cost of establishing a new central database for the processing of student loans. [4056]

Mr. Forth

This work is being put out to tender. No estimate has been made at this stage.