Student loan defaults ’should affect credit rating’

Posted 2008-03-13

New guidelines authorising financial institutions to notify credit agencies about people who fail to meet their student loan repayments are justifiable, one leading financial website has claimed. MoneyFacts.co.uk said students "need to learn that finances need to be paid back" and so individuals who allow themselves to default on their repayments must accept negative consequences on their credit ratings. "Its the same as any kind of finance - all borrowing is done on a trust basis," commented Samantha Owens, head of personal finance at Moneyfacts.co.uk. "It is a lesson to be learned for the future." It emerged last week that details on debts owed to the Student Loans Company - which issues undergraduates with interest-free living expenses loans - may soon be passed on to credit agencies. While some student bodies accused the government of singling out students, Ms Owens insisted they would simply be treated the same as anyone else who borrows money and fails to pay it back. "I dont think its necessarily unfair that they are passing on the details," she said. "Students are intelligent people - they need to learn that finances need to be paid back." According to Credit Action, the average graduate now has £13,000 of debt.

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