Around 86% of student loans in Northern Ireland are repaid, committee hears

Around 86% of student loans in Northern Ireland are fully repaid, a Stormont committee has heard.

Officials from the Student Loans Company as well as from the Department for the Economy, which looks after higher education, gave evidence to the Economy Committee on Wednesday.

Asked what percentage of student loans are repaid, Jonathan O’Callaghan from the department said the figure is estimated at 86.2%.

Loans are written off if not repaid by 25 years after repayment started, or if the recipient can prove they are permanently unfit for work.

“In terms of the department’s accounts, we have to show the fair value of the loan book, and that is effectively the net present value of all the future repayments to be received for loans to date, currently for loans being issued, the RAB (Resource Accounting and Budgeting) charge is 13.8%, so that would imply that 86.2% of all loans are repaid,” Mr O’Callaghan told MLAs.

Mark Lee, director of higher education at the Department for the Economy, said that is a projected figure based on expectations around future earnings and interest rates.

“Obviously people repay over 25 years, so that reflects the projection that is expected at this time,” he added. 

Committee chairman Philip Brett described a “remarkably high rate of repayment return”, and asked how it compared to the rest of the UK.

Mr Lee said it is “better, as in a higher rate of expected payment”, and asked whether that would be due to lower tuition fees in Northern Ireland, added: “That would be part of it, there would be multiple drivers that go in here.”

Mr Brett also asked of that 86%, how many overpay.

He was told that in the financial year 2023/24, 3,000 customers went into credit with a total value of £1.6 million.

The committee heard that around half of those customers have already been refunded with around £60,000 outstanding in refunds for the remaining 50%.

David Wallace of the Student Loans Company said due to the current system it is “entirely possible if not almost entirely likely that everybody will over repay a small amount”.

“It’s a design of the efficiency of the system process, in these conditions provided the individual has kept their contact details up to date on their online account, we will automatically refund credit balance refunds to them for end of loan repayments,” he said.