IVA & Debt Consolidation Advice

According to the Student Loans Company (SLC), many UK graduates are falling behind with their loan repayments, with a total of £180 million worth of loans in arrears at the end of the last financial year.

Students and graduates in the UK owed a combined sum of nearly £19 billion in loans taken out in recent years to finance their studies. These include loans similar in style to mortgages, as well as the recently introduced "income contingent" loans for which repayments are automatically deducted by their employer when they start work.

It appears that the older mortgage style loans, where individuals repay the debt themselves by direct debit, are the worst affected in terms of loans arrears.

Of particular concern is the rise in debt cancellations, which have increased by 60% over the previous year, according to Shadow Higher Education Minister Boris Johnston. Mr Johnston argued that "..there is a real risk of moral hazard if students and families believe these debts will simply be purged by the state." He also commented that "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."

In these times, young people in the UK are faced with historic levels of debt. The worrying increase in student loan arrears no doubt reflects this growing debt problem.