£5 billion of student loans unaccounted for

London (AFP) - Over £5 billion of student loans made from the public purse are unaccounted for, a watchdog said Thursday.

The National Audit Office (NAO) said that £5.3 billion was owed by around 368,000 people for whom there is no current employment record or other earnings details.

The total value of outstanding student loans is also forecast to increase from £46 billion in 2013 to approximately £200 billion by 2042, in 2013 prices, according to the Department for Business, Innovation and Skills (BIS).

The NAO warned that nearly 50 percent of new borrowers are not expected to fully repay their loans.

Of the outstanding £46 billion, BIS expects only £31 billion to be repaid.

The department forecasts that about 35 percent of loans issued in 2013 will not be repaid.

The government introduced changes in 2012 which allow students to borrow more and repay more slowly.

Under the current system, students only repay their loans when they are earning a certain salary -- now set at £21,000 -- and repayments are linked to their earnings.

The watchdog warned that the government had not done enough to establish whether borrowers with no current employment record are earning enough to repay their loans.

"BIS needs to make better use of data to support its collection strategy and improve its understanding of where it could invest to maximise the collection value of the loan book," NAO said.

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