Campus correspondent(wp/Reuters):
Britain will need to recognise upfront from next year that many students will never fully repay government loans, a move that will increase the official measure of public borrowing by billions of pounds, statisticians said on Monday.
British student loan repayments are linked to future earnings, and many students are not expected to earn enough over their working lives to fully repay the loans and interest before they are automatically written off, 30 years after graduation.
About 45 percent of loans and interest are not expected to be repaid, the government told a parliament committee earlier this year, which in turn asked Britain’s Office for National Statistics to factor this into measures of public finances.
Currently, student loan write-offs are not required to be reflected in the public finances until they take place several decades in the future.
But next year - probably from September - the ONS will treat part of the loan as a grant for statistical purposes.
This will increase annual public sector net borrowing as a share of the economy by about 0.6 percent, equivalent to 12 billion pounds for the current year, the ONS said.
There will be no effect on public sector net debt.
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