Question to the Department for Education:

To ask the Secretary of State for Education, what were the reasons for changing the cancellation terms for Plan 1 student loans for borrowers entering repayment from 2006, from cancellation at age 65 to cancellation 25 years after entering repayment; and what assessment was made of the potential impact of that change on borrowers.

Plan 1 loans, and the decisions on their design, were made by previous governments. Although both pre-2006 and post-2006 loans were labelled Plan 1, they are different types of loan. Post-2006 Plan 1 loans had a 25-year repayment term, but higher tuition fees resulted in larger loan balances. Pre-2006 borrowers benefited from lower tuition fee loans and lower balances, with loans written off at the age of 65.

When a new student loan plan is introduced, its terms, including the repayment period, are considered as a whole and are set in legislation for that specific loan type. These terms are not applied retrospectively to borrowers who took out loans under earlier plans.

In relation to the pre-2006 Plan 1 cancellation, ‘The Student Loans: A guide to terms and conditions’ from the academic year 1998/99 states, “Before you reach 65 you will have to make repayments until you have paid off all that you owe. How long this takes will depend on your income during your working life. Once you reach 65 your loan will be cancelled.”

There are no plans to review pre-2006 Plan 1 terms, including the age 65 write-off.