Student bankruptcy claims hit record levels in Scotland

March 12, 2004

Record numbers of Scottish graduates are declaring themselves bankrupt rather than repaying student loans, according to figures from the Scottish Executive.

Student leaders are alarmed by the figures, which show that the number of bankruptcies among those with student loan debts more than doubled from 194 in 2001 to 429 last year.

By comparison, England, with more than eight times the number of home undergraduates, recorded 900 bankruptcies among student borrowers in 2003.

Westminster is to legislate to prevent English graduates writing off student debts through bankruptcy, but Scotland has no such plans.

In total, 1,377 Scottish students who owe money to the Student Loans Company have declared themselves bankrupt since 1990.

Student leaders said a review of the level of state support for undergraduates was needed.

Will Garton, convener of the Coalition of Higher Education Students in Scotland, said: "How can the Scottish Executive claim that it is encouraging growth in the economy when its very policies are bankrupting Scottish students before they have a chance to make any contribution to society? The level of support for Scottish students is woefully inadequate."

Rami Okasha, president of the National Union of Students Scotland, said the union has always urged students to seek professional financial advice before taking such a step. "We have always said the best solution is to stop students getting into debt. They should have more grants."

The executive revealed the figures in a parliamentary answer to shadow education minister Fiona Hyslop of the Scottish National Party. She said:

"Not only is government policy creating a generation of debtors, it is creating debtors who cannot even afford their debt."

A spokeswoman for the Scottish Executive said: "During the same period, the number of young Scots in university education rose from 28 per cent to 51 per cent.

"It is disappointing that the number of student loan borrowers being declared bankrupt has risen, but the number of borrowers declared bankrupt since 1990 is only 0.35 per cent of Scottish students receiving student loan support in that period."

The executive introduced the young students' bursary in 2001, replacing part of the student loan entitlement with a non-repayable grant.

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