The government has been accused of underestimating the value of student loans that will never be paid back, according to a group of MPs.
A report by the Public Accounts Committee (PAC) claimed there is currently £46 billion of outstanding student debt for the government to pay – and this is set to rise to £200 billion by 2042.
While the Department for Business, Innovation and Skills currently assumes between 35 and 40 per cent of that figure will never be paid back, the PAC reckoned this statistic might be overly optimistic.
Margaret Hodge, who chairs the committee, said: “We don’t have confidence in [their] figures. We think that the value of student loans never to be repaid could be even higher.”
She also criticised the Student Loans Company (SLC) for not working hard enough to identify those borrowers who should be making repayments but have slipped out of contact – such as British graduates who are now living abroad.
The committee called for the SLC to get tougher in its approach to debt collecting in an attempt to lower the deficit.