The Government has said it is “very much aware” of the plight of students who have been unable to access loans for at least a year due to the government’s new student loan repayment scheme.
In a statement on Thursday, the Education Secretary, Nicky Morgan, said: “The Department for Education and Skills (DfES) has been working closely with the Department for Work and Pensions (DWP) to support students to have access to their new student loans while also ensuring that people can access help if they have outstanding debts.”
The announcement came after it was revealed that many of those who had been unable, or could not, repay their student loans would have their loans automatically forgiven, with the Government guaranteeing a lump sum payment of £6,000.
“I think there is more awareness and a sense of responsibility,” Ms Morgan said.
“And I think there’s also a feeling that, in the case of students, there is a lot of uncertainty about whether they can repay their loans, or whether they’ll be able to get into a university to study.”
Ms Morgan is currently meeting with DfES, which administers the scheme, and with the DWP, who is responsible for the repayment of students’ loans.
It is the first time that DfEs and DWP have collaborated to offer relief to borrowers in the UK.
The Government says the scheme will help borrowers “keep their money in their savings”, while the Government says it is also helping students to “stay in work”.
“Students are more likely to be in work than they were before they entered university,” the DfE said.
It also said that many borrowers who are unable to get their loans forgiven would be eligible for a “bump sum” payment of up to £6.6 million.
“The bump sum payment is designed to help those who have reached the point where they cannot repay their loan in full, or to enable them to continue to pay their loans in full and help them to build up a case for repayment.”
The scheme will start in July and will be offered to students who had their loans discharged, or were unable to repay their debts, and who have “at least one outstanding debt of £500 or more”.
It will also be offered by those who were previously excluded from the scheme due to their loan amount.
For those borrowers who were eligible, it will be used to “help them pay off their debt”.
However, some of those affected are likely to struggle to pay back their loans.
“It’s hard for some people to pay off the first three years of their loan,” Ms Morrissey said.
“[But] there’s still lots of opportunity to get the balance of the loan paid off.”
She added that the “good news is that a lot more people are likely than ever to be able” to repay a student loan.
“For a lot, if not all, of the borrowers, it’s probably going to be easier to get them back on their feet and to get it paid off, and there’s a lot for them to work on.”
For the most up-to-date on student loan repayments, see our story: What to expect from student loan forgiveness.
“We’ve seen the results of this work, so we’re going to keep working on this,” Ms Palmer said.
The new scheme is set to be rolled out across the country, including at colleges and universities, and is due to be fully implemented in 2018.
“As we get more and more people in the scheme who are able to pay it off, it’ll also be much easier for students to get back into work,” Ms Harris said.
Students will have a year to find out whether they qualify.
However, the scheme is expected to cover those who will be eligible when the scheme launches, and it will continue to provide help to borrowers until they are eligible.
For more news on the new student aid scheme, check out our blog.