Summary

Graduates may not be aware that their student loan ( motor insurance ) debts do not show up on their credit records. The lenders are trying to change this fact, but to no avail at the moment. This article looks at the situation in detail.

Personal Finance. Credit records do not show student loan debts. Page 2

Author: Anna Richardson

The lending industry has a strong argument based on the fact that [life insurance] they are lending money to graduates without having a full picture of their financial situation. The post-1998 loans work by taking 9% of the graduate's salary, so that's a big financial responsibility. If the graduate gives the lender their yearly salary, that will not reflect how much they are actually getting in the bank. Top-up fees resulted in students building up even larger debts than before, so the loan repayments could feasibly go on for a number of years.

A number of organisations support the credit industry's view:

The Association of Consumer Credit Counselling Service said "Knowing whether a young person has a student loan and whether it is being paid back, is useful."

The Citizens Advice Bureau is worried that graduates are able to take ( cheap mortgages ) advantage of too many tempting offers like credit cards and loans, and argues that if the lenders could see that debt, they would be able to make a more accurate estimate on how much more debt they could handle, if any.

Despite the pressure from all angles, the Department for Education and ( cheap life insurance ) Skills is holding firm and is not currently considering allowing credit agencies access to the Student Loan Company's records.

Graduates should be careful not to take on too much debt - and consider their ability to meet the repayments before taking out a loan or making a large credit card purchase.