The National Audit Office said that, until the Department for Business, Innovation and Skills put in place a robust strategy to gather better information on both borrowers and outstanding funds it would not be able to deliver value for money on student loans. Following changes to student finance, the value of outstanding loans is expected to balloon to £200bn by 2042, and the number of borrowers to more than double from 3 million to 6.5 million, the NAO predicts. This would make the student loan book a substantial public asset, it added.
‘Given the expanding size of the student loan book, the Department for Business, Innovation and Skills now needs to take a more energetic and considered approach to maximising the value of the loan book to the taxpayer and achieving a high level of collection performance,’ NAO head Amyas Morse said.
Revenue & Customs and the Student Loans Company last year spent a total of £27m maintaining and collecting repayments worth £1.4bn.
While the NAO praised the joint working between Dbis, HMRC and the Student Loans Company, it noted that there was no annual target for the amount to be collected. However, amounts collected each year tended to consistently undershoot repayment forecasts by about 8%. The department was not able to explain why this was, the NAO said.
Greater efforts should be made, the watchdog said, to understand whether borrowers with no current employment record are earning enough to repay or whether they may be working overseas.
Responding to the report, a Dbis spokesman said: ‘We are continually improving the collection process for borrowers and we will carefully consider the NAO's recommendations as part of this programme.’
But the Association of Teachers and Lecturers called the NAO’s findings ‘frightening’.
Martin Freedman, director of economic strategy at the union, said: ‘The student loan system is out of control.
‘Spending £27m in one year just to collect the repayments is a total waste of public money. It would be far better to spend this on young people’s education than on debt collection.’
