Five Questions On: Mortgage-style student loans

Hang on, wasn't there a scandal about this when the government sold off the loans to a debt collection company?

There were quite a lot of problems when Erudio – owned by debt collectors Arrow Global – began chasing former graduates for debt dating back to the late 1990s. The firm bought the debt from the government last autumn but began chasing former students this spring.

What happened?

There were some problems with data according to the firm, which means it was forced to apologise and hand back cash to 500 graduates that it had wrongly snatched money from their bank accounts.

Was that the end of it?

Hardly. Since then The Independent has been contacted by several folk who say they've had money taken unfairly from their accounts or who have been able to resolve problems with Erudio. To be fair to the firm it has dealt with problems we've sent them quickly. But a steady trickle are arriving, mainly from those worried or surprised to face cash demands because they earn less than the the annual £28,775 earnings threshold.

So what now?

This week the government announced it is lowering the earnings threshold from September, meaning fewer graduates will be able to defer repaying it.

So more former students should expect repayment demands?

Yes. from 1 September only those who earn £26,727 or less will be able to defer paying. The Department for Business, Innovation and Skills has denied that the move has anything to do with the loans being sold off to debt collectors but instead is a regular adjustment to the deferral threshold. However, if you're one of an estimated 300,000 former 1990s students with mortgage-style loans, expect fresh demands. If you're worried you can call Erudio on 0845 217 1134.