Date lodged: 3 January 2019
To ask the Scottish Government what its estimate is of the proportion of the existing student loan book that will not be repaid, in (a) percentage and (b) cash terms, as at the end of 2017-18.
Answered by: Richard Lochhead 31 January 2019
The value of the student loan book disclosed in the Scottish Government accounts reflects the likelihood that a proportion of student loans will not be repaid (the accounts show the ‘fair value’).
Student loans drawn down in the current year are adjusted to reflect expected write-offs and the interest rate subsidy. Those charges were 13.5% (£84.3m) and 11.1% respectively at 31 March 2017 (£66.2m).
Scottish Government also annually reviews the value of the historic loan book to assess the likely value of loans which will not be recovered. At 31 March 2017, the estimated loan write-off was 20.1% of the gross value of historic loans and the interest rate subsidy was 9.8%. The fair value of the loan book is then adjusted as necessary. In 2017-18, the fair value of the loan book was adjusted by £30.1m.