Debt cancellation attacked as graduate arrears grow

According to the latest information from the Student Loans Company (SLC), student loan repayment arrears stood at a massive £186.3 million by the end of the 2005-06 financial year.

The total figure for outstanding student and graduate debt (including that which shouldn’t have been repaid at all yet) was £18.7 billion, the SLC said. Yet the opposition has said that the debts should not be written off.

“There is a real risk of moral hazard if students and families believe these debts will simply be purged by the state,” shadow higher education minister Boris Johnson said, according to the BBC.

“Too much debt cancellation will increasingly be seen as unfair on those families that do struggle to pay. We must make sure that the debt burden is bearable.”

Figures were provided by the SLC for two types of student loans. The mortgage-type loan, which was replaced in 1998 by the income contingent loan, was where most of the arrears lay.

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