U.K. Student Unpaid Debts May Top $133 Billion by 2042Thomas Penny
The U.K. government must reassess its forecasts for student-loan repayments as it faces unpaid debts of more than 80 billion pounds ($133 billion) by 2042, a panel of lawmakers said.
Estimates from the Department for Business, Innovation & Skills can’t be trusted as receipts have repeatedly been less than predicted, the House of Commons Public Accounts Committee said in a report today. Current forecasts suggest as much as 40 percent of loans -- 18 billion pounds at present -- won’t be repaid.
“We think that the value of student loans never to be repaid could be even higher because the government consistently overestimates what’s due to be repaid by some 8 percent,” the committee chairwoman, Margaret Hodge, said in an e-mailed statement. “The department must improve its forecasting so that action can be taken to reduce the ever-growing write-off figures.”
There are about 46 billion pounds in outstanding student loans and, following an increase in fees to as much as 9,000 pounds a year, that will rise to 200 billion pounds by 2042, the cross-party panel said. Plans to sell off part of the loan book must represent “value for money,” which will be hard to achieve if the department does not have robust estimates, the report said.
“We also think that the approach to collecting debts just isn’t tough enough,” said Hodge, a lawmaker from the opposition Labour Party. “The department and Student Loans Co. have not put enough energy into identifying those borrowers who should be making repayments but have slipped out of contact.”
There should be greater sharing of data between government departments to help track down debtors who should be paying back their loans, the committee said.