§ Chris GraylingTo ask the Secretary of State for Education and Skills (1) how much his Department spends each year on the cost of subsidising the student loan book; and what proportion of every pound loaned this represents; [143074]
(2) what the net present value including administration and the subsidy cost, of each pound loaned to students is as part of the student loan book. [143075]
§ Alan JohnsonThe interest subsidy is calculated on the loans issued in year rather than the loans stock. Based on the loans issued during 2001–02, the cost per pound of the subsidy and administration costs was 42p. This is based on
the increase in the interest subsidy provision (including the cost of unwinding the discount) which can vary from year to year according to a number of factors, e.g. the Retail Price Index, HM Treasury discount rate; andthe cash Grant in Aid paid by DIES for administration costs to the Student Loan Company.No figures have yet been published for 2002–03. Information for that year will be contained in the 2002–03 resource accounts which will be published within the next month. The outstanding student loan stock at 31 March 2002 was £7,203,199,000; the closing balance of the interest subsidy provision was £1,593,670,000 and the Grant in Aid to the Student Loans Company was £27,650,000.
§ Chris GraylingTo ask the Secretary of State for Education and Skills how much of the money loaned to students by the Student Loans Company has been written off in each of the past ten financial years. [143648]
§ Alan JohnsonThe table shows the total value of student loans in the UK and in public ownership which have been written off or cancelled in each financial year.
£ million Financial year Amount written off or cancelled 1,2,3 1993–94 0.2 1994–95 0.3 1995–96 0.5 1996–97 0.9 1997–98 1.0 1998–99 of which: 0.9 Income Contingent Loans 4— 1999–20005 of which: 1.2 Income Contingent Loans 6— 2000–01 of which: 1.1 Income Contingent Loans 0.2 2001–02 (provisional) of which: 1.4 Income Contingent Loans 0.4 2002–03 (provisional) of which: 2.6 Income Contingent Loans 0.7 1 The table shows the value of loans cancelled or written off during each financial year.
2 Two portfolios of student loans to the value of just over £2 billion have been sold to the private sector in March 1998 and March 1999. The figures in the table relate to the public debt only.
838W3 A cancelled loan is one where the borrower no longer has any liability to repay as set out by legislation. A borrower's liability to repay a mortgage style loan shall be cancelled: on death of the borrower; after 25 years or when the borrower reaches the age of 50 (60 if the borrower was aged over 40 when he/she last borrowed), whichever is the earlier, provided the borrower is not in arrears of any loan agreement; and if the borrower is in receipt of a disability related benefit and permanently unfit for work. Income contingent loans are cancelled because of death or permanent disability in the same way, but are cancelled on the grounds of age when the borrower reaches the age of 65. A written off loan is one where the borrower remains liable to repay but recovery is deemed unlikely by the loan administrator or not possible by legal judgment.
4 Not available.
5 Amounts written off in 1999–2000 include some transactions which relate to the previous financial year.
6 Nil/negligible.
The amount written off or cancelled may relate to loans advanced in any of the previous financial years. Therefore data cannot be expressed as a proportion of amount lent.
In addition to the amount shown in the table, £0.5 million was written off under the Repayment of Teacher Loans scheme in respect of accounts in public ownership in financial year 2002–03.
The introduction of the income contingent loan based system of student support from 1998–99 meant that the amount of student loans paid out each year has increased. The amount of loan advanced in 1993–94 was £292.3 million (all mortgage style); in 2002–03 it was £2,618.0 million (of which £2,599.2 million was income contingent loans). A consequence of this increase is a higher level of write-off or cancellation.