Student mortgage debt write off doubles for ‘unfit to work’ graduates in simply 4 years
The annual amount of student debt written off due to graduates being ‘unfit to work’ has doubled in just four years, new figures show.
Data from the Student Loans Company (SLC) shows around £4 million was wiped last year for this reason, up from £2 million in 2020-21.
Graduates who are unlikely ever to be able to work – due to an uncurable illness or a life-changing accident – can apply for their debt to be cancelled before the end of the loan term.
Over the last five years, a total of £16 million in loans has been cancelled in this way, with the tab picked up by the taxpayer.
To be eligible, applicants have to submit medical evidence such as a letter from a doctor saying that they are permanently unfit for employment and proof of a disability-related benefit such as disability living allowance or personal independence payment (PIP).
The SLC does not record the grounds for claiming or the type of disability.
The annual amount of student debt written off due to graduates being ‘unfit to work’ has doubled in just four years, new figures show (file picture)
The figures, released under the Freedom of Information Act, have raised questions over whether the system could be open to abuse.
Nick Hillman, director of the Higher Education Policy Institute, and former special advisor to the Tories on universities, warned against permanently labelling someone as unfit to work.
He told The Times: ‘It could incentivise a small minority to exaggerate their inability to work and even send a signal that some people’s right to work should be written off at the very start of their working lives, even though work and medical care is constantly changing.’
The data shows 130 graduates had £1.96 million of loans cancelled in 2020-21. This rose to 158 graduates in 2024-25 owing £3.99 million.
This amount is likely to soar as more graduates repay higher tuition fees, which tripled from £3,000 to £9,000 a year in 2012 and now stand at £9,535.
However, the amount of written-off loans is still only a tiny proportion of the £260 billion overall value of student loan liabilities.
It is understood a person would have to be severely disabled – for example suffering brain damage or paralysis – to be considered permanently unfit for work.
A spokesman for Disabled Students UK said: ‘The number of graduates having their debt written off represents a tiny fraction of the more than 900,000 graduates within higher education annually. These graduates are required to provide evidence that they will never be fit for work, having likely experienced life-changing events or ill health to be in that category.
‘Growing student debt is an increasing stressor on graduates and so it is vital that graduates that will never be fit to work have a safety net.’
It comes amid a row over Plan 2 student loans, with many graduates saying their debt is growing faster than they can repay it.
Ministers are expected to U-turn over their decision to freeze until 2030 the salary threshold at which graduates start repaying their loans at £28,470.
Interest on the tuition and maintenance loans under Plan 2, which includes borrowers in England who took out a loan from 2012 to July 2023, is charged at RPI plus up to 3 per cent.
Kemi Badenoch has described the system as a ‘debt trap’ for graduates.
