The Education (Student Loans)(Repayment)(Amendment) Regulations 2006

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1^st September 2006, amend the Education (Student Loans) (Repayment) Regulations 2000 (S.I. 2000/944) (“the principal Regulations”).

Under section 44 of the Higher Education Act 2004 certain student support functions of the Secretary of State under section 22 of the Teaching and Higher Education Act 1998 were transferred to the National Assembly for Wales.

Regulation 3 inserts a new definition into regulation 2 of the principal Regulations.

Regulation 4 amends regulation 3 of the principal Regulations. When the National Assembly for Wales determines that loans made under Regulations made by it under section 22 of the Teaching and Higher Education Act 1998 are to be collected by Her Majesty’s Revenue and Customs (referred to as “the Board” in these and the principal Regulations), then those parts of the principal Regulations which relate to collection by the Board apply to those loans.

Regulation 5 inserts some new definitions into regulation 9 of the principal Regulations and sets out their application in relation to Wales.

Regulations 6 and 7 make consequential amendments to regulations 10 and 11.

Regulation 8 applies regulation 12 to Wales only.

Regulation 9 inserts a new regulation 12A of the principal Regulations in relation to England only. The Secretary of State writes off a borrower’s liability to repay his student loan in certain circumstances. The loan is written off if the borrower dies, if the borrower reaches the age of 65, or if the borrower receives a disability related benefit and as a result of the disability is permanently unfit to work. From September 2006 certain categories of borrowers will have their student loans written off 25 years after they became liable to repay. The remaining borrowers will have their loans written off when they reach the age of 65.

Regulation 10 inserts a new paragraph into regulation 13C of the principal Regulations. Regulation 13C provides that the Secretary of State may impose penalties on borrowers who fail to comply with requests for information. If the borrower fails to provide information, he may be charged a penalty of £50. Regulation 10 inserts a provision to the effect that the Secretary of State may impose a further charge of £100 where a borrower has paid a penalty but continues to refuse to provide the information. Regulation 11 makes a consequential amendment to regulation 13E of the principal Regulations.

Regulation 12 amends the principal Regulations so that where a borrower fails to provide information or to comply with a Penalty Notice, the Secretary of State may require him to repay his loan in full.

Regulation 13 limits the application of Part 5 to Wales only.

Regulation 14 substitutes a new Part 6 to the principal Regulations, inserting new regulations 58 to 66 in relation to England only. This Part deals with repayment of student loans by borrowers who move overseas following their courses of higher education. Borrowers are under a duty to notify the Secretary of State when they move overseas for a period of more than three months. They must also provide information as to their income (regulation 60 of the principal Regulations).

When a borrower moves overseas, the Secretary of State may serve a notice upon him requiring him to repay his loan in accordance with the principal Regulations. In such a notice, the Secretary of State may require the borrower who has failed to provide him with information required under regulation 60 of the principal Regulations to make a repayment to reduce the amount outstanding on his loan to that which would have been outstanding had the borrower provided the information.

Borrowers will be required to repay their loans by a fixed instalment under regulation 62 of the principal Regulations, unless regulation 63 applies. They will have to repay a fixed instalment each month, which will be calculated in accordance with regulation 64.

Under regulation 63 of the principal Regulations a borrower who has complied with a request for information may repay his loan for a period of 12 months by 12 income-related instalments. The instalment is one twelfth of 9% of the borrower’s gross income, disregarding income up to an applicable threshold, and any income in respect of which the borrower will be making loan repayments through the UK tax system. At the end of the 12 month period, the borrower’s repayments can be re-assessed, or he can repay in accordance with regulations 62 and 63. The borrower may also seek a re-determination of his income-related instalments during the 12 month period.

Regulation 64 sets out how the applicable threshold and fixed instalments are calculated. These will be calculated by reference to the price level index of a borrower’s country of residence. The price level index for that country will be calculated using the most recent provisional comparative price level indices measured in gross domestic product produced by the Statistical Office for the European Communities (“Eurostat”). The applicable threshold and fixed instalment for each of a series of bands of price level indices are set out in a table in regulation 64. Where no data is available from Eurostat, data from the World Bank will be used. If there is no data available from the World Bank in relation to a country, the applicable threshold and fixed instalment for band A will apply.

Regulation 65 provides for borrowers returning to the United Kingdom to cease making repayments under this part of the Regulations.

Regulation 66 provides that the Secretary of State may require a defaulting borrower to repay the whole of his loan.