The Scottish Government

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Student loans for higher education 2008-2009

25/06/2009

Statistics on student loans for higher education in Scotland for the financial year 2008-2009 have been published jointly today by the Student Loans Company (SLC) and Scotland's Chief Statistician.

Key findings include:

• The amount lent to eligible HE students for maintenance loans during the financial year 2008-2009 was £179.8 million, a decrease of seven per cent when compared with 2007-2008 and a decrease of two per cent when compared with 2006-2007. The figures for 2007-2008 were higher than expected due to the introduction of monthly loan payments
• The amount lent to eligible HE students for graduate endowment loans during the financial year 2008-2009 was £2.8 milliom, a decrease of 81 per cent when compared with 2007-2008. This decrease is due to the abolition of the graduate endowment
• The total amount lent to eligible HE students during the financial year 2008-2009 was £191.3 million, a decrease of 10 per cent when compared with 2007-2008 and three per cent when compared with 2006-2007. The figures for 2007-2008 were higher than expected due to the introduction of monthly maintenance loan payments

• Repayments posted to customer accounts amounted to £77.5 million in the financial year 2008-2009, an increase of 28 per cent compared to 2007-2008

• The balance outstanding (including loans not yet due for repayment) at the end of the financial year 2008-2009 was £2,227.4 million, an increase of nine per cent compared with 2007-2008. This is the amount which remains to be repaid since the introduction of student loans for higher education. The balance outstanding on income contingent loans was £2,070.9 million, an increase of 10 per cent compared with 2007-2008
• At the end of the financial year 2008-2009 there were 386,800 borrowers, an increase of five per cent when compared with the financial year 2007-2008. Seventy-five per cent of those borrowers (289,500) had accounts liable for repayment, an increase of seven per cent compared with 2007-2008
• The average outstanding balance was £5,765. This includes all customers with an outstanding balance from those starting HE with low balances through to those finished HE but not yet in repayment with high balances, to those who have been in repayment for several years with low balances

This publication updates previous statistics on student loans for higher education in Scotland 2007-2008, published on June 12, 2008. The statistics were compiled by the Student Loans Company (SLC) and include public sector loans only, made and repaid on both an income contingent basis and a mortgage style basis. This is the second year for which figures for Scotland have been published separately to those for the other UK administrations. Statistics for England, Wales and Northern Ireland will also be published on June 25, 2009.

This publication relates to Scottish domiciled higher education students and EU domiciled higher education students studying in Scotland. Higher education refers to any qualification at HNC/HND level or above.

The graduate endowment was introduced for Scottish domiciled and EU domiciled higher education students studying in Scotland who commenced studying in 2001. It was a one-off payment made in recognition of the higher education benefits received and could be paid by paying the full amount in cash, by taking a student loan or by a combination of the two. The Graduate Endowment Abolishment (Scotland) Act 2008 came into force on April 1, 2008, abolishing the graduate endowment fee for all students who graduated on or after the April 1, 2007. Therefore the financial year 2007-08 was the last year that student loans for graduate endowment were taken out, with the small exception of postgraduate students who had previously deferred payment. These loans carry over into the financial year 2008-2009.

In the academic year 2006-2007 fee loans were introduced for Scottish domiciled students studying in the rest of the UK to allow them to defer payment of their tuition fees. The repayment of fee loans is no different to that of maintenance loans.

The annual Retail Price Index (RPI) from March to March is used as the interest rate for all types of student loan from the following September to August. The interest rates used to adjust the outstanding balances were 4.8 per cent (as measured by the March 2007 RPI) up to the end of August 2008 and 3.8 per cent (as measured by the March 2008 RPI) from the beginning of September 2008. There is an extra clause in the regulations for income contingent repayment (ICR) loans which states that the interest rate cannot be more than one per cent higher than the base rate of major banks. This caused the interest rate for ICR loans to drop to three per cent from December 4, 2008 and then it dropped by a further 0.5 per cent each month becoming 1.5 per cent from March 6, 2009.

In the financial year 2008-2009, improved automated system capabilities were introduced to enable loan balances to be cancelled for Income Contingent loan accounts for reasons of death or disability. This also allowed a backlog of cancellations to be processed. Cancellations for death and disability in future years will be lower than in 2008-2009 because they will cover a single year and will not include a backlog.

The introduction of monthly payments to Scottish maintenance loan customers in 2007-2008, has caused the maintenance loan amount lent to be artificially high for the financial year 2007-2008. The financial year 2008-2009 represents the expected amount lent within a financial year and is comparable with 2006-2007.