Student loans push deficit up by more than £10 billion

Changes to the way student loans are treated in government accounts are set to add £10.6 billion to the national deficit this year, the Office for National Statistics has confirmed.

In December, the ONS concluded that the portion of student loans that are not expected to be repaid after 30 years should be counted as government spending, since loans are written off after this period. It estimated at the time that implementing this change would add £12bn to the national deficit in 2019.

The initial estimate was based on calculations by the Office for Budget Responsibility, whereas the revised, downgraded estimate looks at the amount that would have been added to public sector net borrowing had the new system had been in place for the financial year ending March 2019. The lower £10.6bn figure remains provisional, with the new treatment of student loans beginning in the next academic year.