BIS Ref: 11/0886Martin WilliamsEmail:******@gmail.com26 July 2011Dear Mr WilliamsThank you for your email of 4th July 2011 in which you requested information aboutstudent debt. The information you requested is enclosed.1) How much is the total student debt expected to be when it eventually ceases to rise,because the incomes from students paying into the scheme is greater than theoutgoings to new students? When is this expected to be?2) A financial forecast for the total student debt and projected loan repayments, per year -this should date from 2011 to whatever date student debt is expected to peak at.3) If known, please also provide the expectations for how much average student debt (i.e.the average debt of an average

individual

student) will rise to, and the date of this.Forecasting student loan expenditure and repayments several decades into the future isinherently difficult and relies upon a great number of assumptions about future events,economic growth and student behaviour, and cannot anticipate decisions that may betaken by future Governments.The current BIS estimate for the year when total full time student debt will cease to rise is2047. At that point repayments by borrowers and cancellations due to death, permanentdisability and write-offs after 30 years (2012/13 entrants onwards) will exceed new loanissues. The total debt at that time is expected to be around £191bn after adjusting for inflation and is presented in 2011 prices.The table shows projections each year from from 2011-12 to 2050-51. Again, the figuresare all adjusted for inflation and presented in 2011 prices.

Financial Year2011/122012/132013/142014/152015/162016/172017/182018/192019/202020/21TotalOutstanding(Start of Year) (£bn)

35394450576472808794

Repayments(£bn)

1.71.82.12.32.62.83.03.33.53.8

Financial Year2021/222022/232023/242024/252025/262026/272027/282028/292029/302030/31TotalOutstanding(Start of Year) (£bn)

101107114120126132138143148153

Repayments(£bn)

4.14.34.54.85.15.45.86.16.56.9

Financial Year2031/322032/332033/342034/352035/362036/372037/382038/392039/402040/41TotalOutstanding(Start of Year) (£bn)

158162166169173176178180182184

Repayments(£bn)

7.37.67.98.28.68.99.19.39.59.8

Financial Year2041/422042/432043/442044/452045/462046/472047/482048/492049/502050/51TotalOutstanding(Start of Year) (£bn)

185187188189190191191189187186

Repayments(£bn)

10.010.210.410.610.710.810.810.910.910.9

The projections are based on the new student support system and repayment regulationsdue to be introduced for students entering study from 2012/13 onwards and are updatedon a regular basis. They are for full time English students at UK Higher EducationInstitutions (HEIs) and for full time EU students at English HEIs. EU students are eligiblefor fee loans only. Projections for part time and FE students have not been included asthey are currently unavailableThe average loan balance of all borrowers who are past their Statutory Repayment DueDate (SRDD), the April after they leave their course, and who have not fully repaid or hadtheir loan balance cancelled, is estimated to peak at just over £31k (adjusted for inflation,in 2011 prices) in 2032.The main purpose of the forecasting model that generated the above numbers is toforecast the long term cost to the taxpayer due to interest subsidy (the difference betweeninterest charged to students and the Government’s cost of borrowing) and write-offs (either because the term of the loan -25 years under the old system, 30 under the new- has beenmet, or on age grounds for some older loans or due to death/permanent disability) of theloans issued to students each year. This allows the Government to ensure that the systemis fair, reasonable and affordable for the nation in the long term.The above numbers do not include any assumptions about potential changes to studentsupport in the future. In particular there are a number of key assumptions upon whichthese projections depend heavily. Average fee loans are assumed to be just over £7,500in 2012/13 and both maintenance and fee loans are assumed to increase in line withinflation every year between then and 2050-51. Take-up rates are assumed to be around80% of eligible students for maintenance loans and 90% of eligible students for fee loans.Student numbers are assumed to be constant so do not take account of a growingpopulation and the need for a more skilled workforce. The projections do not take intoaccount any potential increases in alternative modes of provision, for example cheaper part-time, accelerated learning and distance learning courses.Page 2