Clause 39 - Effect of bankruptcy
Higher Education Bill
3:00 pm
Mr Ivan Lewis (Parliamentary Under-Secretary, Department for Education and Skills; Bury South, Labour)
No. The purpose of the clause is to remove the student loan from the bankruptcy framework. The student loan will be related entirely to a graduate's income under the income contingent scheme. The status quo is that the student loan is part of the bankruptcy framework. In many ways, that was an unintended consequence of legislation enacted by successive Governments. However, because of issues raised in the past 12 to 18 months, the Government became aware of the implications. We want to change that legislation through the Bill, thereby entirely removing that set of circumstances from the bankruptcy framework. That would also reinforce the point that the Government cannot be a preferred creditor in such circumstances, because that is not part of the bankruptcy framework and we have no intention of making it so.
The hon. Gentleman also raised the historical question of selling off debt. That happened with the old mortgage-style student loan debt, which was sold in 1998 and 1999, but there are no plans to sell any more student loan debt to the private sector. In any
case, the terms and conditions of the loan are preserved by the sale agreement. Despite what he said about that, there are genuinely no risks or concerns.