The UK and Australian governments are set to share data on expatriate graduates in a bid to improve student debt collection.
The planned agreement is part of a new strategy designed to help recoup more of the £457 million portion of the UK student loan book that is held by non-paying or “unverified” borrowers who live overseas.
Australia is the most popular destination for British university leavers who have a student loan, and correspondingly is home to the largest amount of outstanding debt apart from the UK itself.
Ministers are pursuing the idea of data sharing – in which information on Australian graduates in the UK could also be shared with the Canberra government – after successful pilots involving Sweden and the Netherlands.
In the trials, each country shared the details of about 200 borrowers, believed to be in each other’s countries, who were not making regular repayments and whose status was unknown. Using public and government data, it proved possible to locate up to 90 per cent of non-responding borrowers, and one in five of these started making repayments after receiving a single letter.
The strategy says that other European Union countries are joining the initiative, which could become a “wider European approach to data sharing”, and adds that talks are also under way with more non-EU countries.
In addition, the Student Loans Company could make increased use of international debt collection services and “tracing agencies”.
The strategy also says that sanctions for borrowers in the UK and overseas who actively evade repayment could be strengthened, with options including the levying of penalties, serving a default notice to a borrower’s credit history and “the use of litigation where appropriate and cost-effective”.
In a written statement to the House of Commons, Jo Johnson, the universities minister, said that the student loan repayment system must be “fair, robust and efficient”.
“We will do more to support borrowers who seek to meet their loan repayment obligations, and, in the interests of fairness to both the taxpayer and to borrowers that meet their obligations, we will be tougher on those who do not,” Mr Johnson said.
“We will take stronger action to trace borrowers including those overseas, act to recover loan repayments where it is clear that borrowers are seeking to avoid repayment, consider the use of sanctions against borrowers who breach loan repayment terms and, if necessary, prosecute.”
The strategy says that 98 per cent of the outstanding student loan balance – some £72 billion – is held by borrowers thought to be in the UK. Another £1.5 billion relates to borrowers living overseas, the vast majority of these being British expatriates.
In total, £8.3 billion of the outstanding balance is held by borrowers who are either in arrears, non-paying or unverified.