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The Student Loans Company (SLC) admitted that nearly 80,000 former foreign student borrowers have left the United Kingdom (UK) without paying back a total of £1.2 billion in student loan debt, according to a UK news outlet.
This problem only adds to a worsening student debt situation in the UK. Many experts project the outstanding student debt will reach £1 trillion by 2035.
It is estimated that roughly 400 students leave the UK each month to avoid paying back their debts and owe a combined £8.5 million. On average, each foreign student debtor that scurried out of the UK owes the British government roughly £15,000 in student loans.
Of the 80,000 foreign student debtors, 17,600 of them are officially behind on repayment. An additional 49,000 are reportedly earning below the amount that triggers repayment. Meanwhile, 12,000 borrowers have failed to state their earnings and have been categorized as being in arrears.
The SLC believes that the top 5 countries where students are failing to repay their debts from studying at an English university are (in order) Australia, Cyprus, the United States, France, and Germany. Additionally, foreign borrowers have outstanding accounts registered in places like Pakistan, Uganda, Iraq, and Argentina.
It is believed that many students who studied in the UK feel overwhelmed by their debts and leave the country to avoid being tracked down by the English government. In the UK, the SLC has an agreement with the government that allows student loan payments to be drawn automatically from a borrower’s paycheck once they start earning above a certain threshold.
In a statement, a Student Loans Company representative said the following: “The vast majority of borrowers meet their obligation to repay their loans when their income reaches the payment threshold. In this case 49,000 students have yet to earn enough to start repaying and when they do, we expect them to meet the repayment terms they signed up for when they took out their student loans. SLC is committed to protecting the public purse and recovering every penny of taxpayer monies owed.”
Regarding how the UK authorities plan to remedy this situation in the future, the SLC representative said this: “Government’s repayment strategy will boost SLC’s capability to trace noncompliant borrowers, pursue and recover outstanding student loan debt, and it also includes the provision for the potential use of a number of sanctions.”
There has not been much positive press regarding the SLC and how they plan to recover student loan debt. Recently, LendEDU reported how students in Northern Ireland owe the SLC £3 billion in educational debts. That amount marked a 10.6 percent increase from last year when borrowers owed £2.7 billion.
Author: Dave Rathmanner
As the VP of Content at LendEDU, Dave regularly plans and writes content to help consumers with their personal finances. Dave’s work has been featured in the Chicago Tribune, Bloomberg, CNBC, US News, Yahoo Finance, NPR, and more.