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Why is £825m of Britain’s first student loan debt still outstanding after nearly 30 years?

Journalist: Aaliyah Ahmed, The Times

ended 14. August 2026

I’m looking for student finance, higher education and personal finance experts to comment on new data showing that 76,637 borrowers who took out Britain’s first income-contingent student loans in 1998/99 still have outstanding balances totalling £825.4 million, almost 30 years later.

I’m particularly interested in understanding why so much debt remains outstanding from a generation that faced tuition fees of up to £1,000 a year, including how maintenance borrowing and decades of accumulated interest contributed to today’s balances. Official figures from the period show that student loans were also available to help cover living costs, meaning the amount borrowed could be substantially higher than the tuition fee alone. 

Only 20,242 of the borrowers are currently making repayments, while 56,395 have outstanding balances but are not currently repaying. I’d like experts to explain what this tells us about the income-contingent repayment system and whether it is misleading to describe these borrowers as having “failed to pay off” their loans, given that repayments are linked to earnings.

I’m also interested in the £27.1 million of debt that has been cancelled or written off, including £17 million for borrowers who reached 65 and £8.9 million following the deaths of borrowers, and whether this level of cancellation was expected when the system was introduced.

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Damian Pudner
Senior Research Fellow at Great British Think Tank
"Failed to pay off" is the wrong verb. Income-contingent loans were built to be written off after 30 years for anyone who never cleared the earnings threshold. Nobody missed a payment; the loan simply sat there accruing interest until income or time caught it. Tuition in 1998/99 was capped at £1,000 a year, so most of the £825m across 76,637 people, roughly £10,800 each, is compounded interest on maintenance borrowing, not runaway fee debt. The 20,242/56,395 repaying split reflects income today, not compliance. And the £27.1m written off, £17m at 65, £8.9m on death, is exactly what an income-contingent book is priced to lose, captured in the Treasury's own RAB charge at launch. If it matches those assumptions, the system worked as designed. The real story isn't unpaid debt. It's why a scheme that behaves like a graduate tax was ever scored and sold as a loan.