PART 8INTEREST AND INSOLVENCY

Interest88.

(1)

Subject to paragraph (2), loans bear interest at the rate which will result in an annual percentage rate of charge determined in accordance with the Consumer Credit (Total Charge for Credit) Regulations 198056 equal to the percentage increase between the retail prices all items index published by the Office for National Statistics for March 2007 and that index so published for March 2008.

(2)

If the rate referred to in paragraph (1) exceeds the rate for the time being specified for the purposes of any exemption conferred by virtue of section 16(5)(b) of the Consumer Credit Act 197457 loans bear interest at the rate so specified.

(3)

Interest is calculated on the principal outstanding daily and is added to the principal monthly.

(4)

The index of prices to which the Department is required by Article 3(8) of the Order to have regard in prescribing the rate of interest which loans bear is the retail prices all items index mentioned in paragraph (1).

Insolvency89.

(1)

In Northern Ireland—

(a)

there shall not be treated as part of a bankrupt’s estate or claimed for his estate under Article 280 or 283 of the Insolvency (Northern Ireland) Order 198958 any sum payable to an eligible student by way of a loan and which he receives or is entitled to receive after the commencement of the bankruptcy, whether his entitlement arises before or after the commencement of his bankruptcy; and

(b)

there shall not be included in a person’s bankruptcy debts any debt or liability to which he is or may become subject in respect of any sum payable to an eligible student by way of loan and which he receives or is entitled to receive—

(i)

in the case of a bankruptcy commencing before 15th January 2005, after the commencement of the bankruptcy; or

(ii)

in the case of a bankruptcy commencing on or after 15th January 2005, before or after the commencement of the bankruptcy.

(2)

In England and Wales—

(a)

there shall not be treated as part of a bankrupt’s estate or claimed for his estate under section 307 or 310 of the Insolvency Act 198659 any sum payable to an eligible student by way of a loan and which he receives or is entitled to receive after the commencement of the bankruptcy, whether his entitlement arises before or after the commencement of his bankruptcy; and

(b)

there shall not be included in a person’s bankruptcy debts any debt or liability to which he is or may become subject in respect of any sum payable to an eligible student by way of a loan and which he receives or is entitled to receive—

(i)

in the case of a bankruptcy commencing before 15th January 2005, after the commencement of the bankruptcy; or

(ii)

in the case of a bankruptcy commencing on or after 15th January 2005, before or after the commencement of the bankruptcy.

(3)

In this regulation, “loan” means a loan pursuant to regulations made by the Department under Article 3 of the Order, including the interest on the loan and any penalties or charges incurred in connection with it.