Graduates sued over pounds 500,000 loans debt: Company 'heavy-handed' as action taken against 600 defaulters

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MORE THAN 600 graduates have been taken to court for failing to repay student loans. The company which administers the loans says almost pounds 500,000 is outstanding.

The Students Loan Company, set up by ministers to run the system, revealed the figures in a letter to Stephen Byers, Labour MP for Wallsend. Mr Byers has accused the company of taking a heavy-handed approach, and has called for an investigation into the way it operates.

In August, bailiffs were asked to recover outstanding debts from three graduates in Bristol, east London and Merseyside, who owed pounds 1,100 in total. Attachment of earnings orders have now been taken out against 38 graduates.

Most of the court judgments have been obtained since April this year, one year after the first 54,000 students should have begun repaying their loans. Ron Harrison, chief executive of the loan company, told Mr Byers that 636 county court judgments had been taken out against defaulters. A total of pounds 494,591 which should have been repaid was outstanding, he said.

The maximum amount which a student could borrow was pounds 460 in 1990-1991, and has risen to pounds 940 in the current academic year.

Mr Byers said the loans company should have offered help and

counselling to those who had failed to pay. 'As a matter of urgency Government ministers should investigate the way in which the company is operating. It would appear to be using the sort of heavy-handed approach which many high street banks would be reluctant to adopt,' he said.

Mr Harrison was not available for comment last night, but a spokesman for the Department for Education said that a small proportion of the students who had taken out loans had been sued.

'The repayment terms are very generous in comparison with other lenders. At the end of the day, it is money that has been loaned by the taxpayer,' he said.

Lorna Fitsimons, president of the National Union of Students, said: 'The student loans scheme is a nightmare, for students, for graduates, for colleges and for the taxpayer. It is costing millions of pounds to administer, and there are reports of severe communication problems between graduates and the company.'

The number of schools voting to opt out of local authority control has slumped dramatically, according to the Local Schools Information, an advisory body.

It said yesterday that opting out, the centrepiece of the Government's education policy, had collapsed with the number of ballots to be held this month down to 19, compared with 95 for October last year. September's total was nine compared with 16 last year.

The DoE dismissed the figures saying that nothing could be proved from one month's statistics and that the numbers for last October had been artificially inflated.

Local Schools Information, which is funded mainly by local authorities, also said that the proportion of schools voting against opting out had 'rocketed'. In September and October last year only 19 per cent of those voting were against opting out. Of the 12 results declared so far this term, nine have been against.

The DoE said: 'Although the rate of yes voting inevitably fluctuates from month to month it has held up at around four out of five since balloting begun, yielding a total of 983 yes votes. In the past, there have not been large numbers of ballots in September or October. Last October was an exception to this and to compare the number of ballots this October with the number last October is misleading.'