Govt overestimating student loan repayments

Fri, 14 Feb 2014

The coalition government could be underestimating the value of student loans that will never be paid back by postgraduates, a committee of MPs has claimed.

According to the Public Accounts Committee (PAC), there is currently 46 billion of outstanding student debt - a figure that is expected to rise to 200 billion by 2042. However, officials assume that between 35 per cent and 45 per cent will never be paid back.

In its latest report, the PAC said that the figure may be overly optimistic. Authors said that since student loans were introduced in 1990, there is a lack of a "reliable model for forecasting how much will be repaid".

Margaret Hodge, chairwoman of the body, said the government has consistently overestimated the amount of money it would get back from repaid student loans by as much as eight per cent.

She explained: "We think that the value of student loans never to be repaid could be even higher."
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