Students Could Risk Overstretching On Credit

Hundreds of thousands of graduates and students could be granted credit they cannot afford because lenders have no access to government-backed student loan accounts, according to a credit reference agency.

Callcredit said by refusing to share data on whether graduates have student loans and how they are repaying them, the government is hindering credit companies from providing responsible lending.

The credit industry relies on using shared financial information about an individual's level of debt and repayment history to help determine whether or not to provide credit.

Nearly three million people had student loans with a value of £16.45 billion at the end of March 2005 and without detailed data on these accounts, credit providers are lending in the dark – or preferring not to lend at all.

Mel Mitchley from Callcredit said: "The government has been putting a lot of pressure on lenders to know their customer better and make more responsible lending decisions. But there are 2.8m people in the UK who are currently under the credit radar because of its decision not to share student loan information."

For students repaying debt through income deductions, collection starts when they earn more than £15,000 a year and effectively reduces gross income by nine per cent – this will impact on possible future credit because salary will effectively be less than declared.

"To many people it's a no-brainer, the information should be shared as it would help people who have a responsible attitude to their student debt and prevent those who are already in difficulty being granted further credit. We need to have further debate on the matter."

The Student Loans Company has been lobbying the Department for Education and Skills to make the data public.