£29m has been written off as the firm repsonsible for the student finance system firm tightens its debt recovery procedures.

With new means of revealing debtors’ work and income status, and advancement in chasing European students who have since left the country, the Student Loans Company (SLC) have made improvements across the board in an attempt to get debt collection for the company under control. With student loans now causing the public debt of £26bn, this move come as no real surprise to many.

The public debt was increased dramatically in 2006 with the introduction of the student finance package by the Government. This meant that students borrowed indirectly from the Government through the SLC to cover tuition and maintenance costs. The figures of £26bn is also more than double the amount at the end of 2005, which was six months before variable tuition fees were introduced.

A spokesman for the SLC said “There has been a tightening of processes in terms of recovery. As a business we are constantly reviewing and improving what we do. The SLC has established new robust processes. Those staying in the UK are expected to obtain a National Insurance Number and make repayments through the UK tax system. But those borrowers who move will have repayments automatically scheduled if they fail to respond to SLC by next April. This will enable default schedules to be set up, borrowers traced and, where appropriate, legal action will be taken.”

The £29m worth of public debt that is being written off was broken down into 2,500 student loans and out of that figure 1,700 were written off or cancelled due to death, although the SLC is keen to point out that not all deaths occurs in the last year and that it was a cleanup of previous years. SLC’s figures also showed that 227,000 debtors still had an employment status of undertimend. The SLC says this group includes people who have changed jobs and are paying back their loans but waiting for their HMRC records to be updated, people who are unemployed but not on benefits and people who have gone back to study full time or part time.

Students are now expected to graduate with total debts of about £23,000, a recent survey suggests.

Loans are written off when recovery is deemed unlikely by the loan administrator or not possible by legal judgement. They are cancelled when the debtor is no longer duty-bound to repay.

Students do not have to repay their loans until they earn at least £2,161 a month or 85% of national average earnings.