The Education (Student Loans) (Scotland) Regulations 1999

Explanatory Note

(This note is not part of the Regulations)

These Regulations provide for loans for maintenance for eligible students attending designated courses of higher education. They apply to loans payable for an academic year starting on or after 1st August 1999 (regulation 3(2)). They revoke the Education (Student Loans) (Scotland) Regulations 1998 on 1st August 1999 (regulation 3(1)), subject to a savings provision that the 1998 Regulations will continue to apply to students attending a course for which the academic year begins before 1st August 1999 (regulation 3(2) and (3)).

Students are eligible students for the purposes of these Regulations if on the first day of the first academic year of the course they are settled in the United Kingdom for the purposes of the Immigration Act 1971, on that day they are ordinarily resident in Scotland, and for the three years immediately preceding that day they have been ordinarily resident in the United Kingdom and Islands for purposes other than receiving full-time education (regulation 4(2) and Schedule 1, paragraphs 1 and 7). Students may also be eligible if they are refugees, if they have been granted exceptional leave to remain in the United Kingdom, or if they are European Economic Area migrant workers, or the spouses or children of such workers (Schedule 1, paragraphs 2 to 6). Such students must also be ordinarily resident in Scotland on the first day of the course, and in some cases meet other residence conditions (Schedule 1, paragraph 7).

To be eligible students must also attend a designated course, be under the age of 50 on the first day of the course or if aged 50 or over and under 55 they must be intending to enter employment on completion of the course, not be eligible for a loan under the Education (Student Loans) Act 1990 or the Education (Student Loans) (Northern Ireland) Order 1990 (which provides for the existing mortgage style student loans for students who began their course before 1st August 1998, and certain other students) or under the Teaching and Higher Education Act 1998 or the Education (Student Support) (Northern Ireland) Order 1998. In addition they must not be eligible for certain National Health Service bursaries or awards, not be in breach of any obligation to repay any other student loan and have ratified, where appropriate, any other student loan they received when they were under the age of 18 (regulation 4(2)).

Courses which are designated courses for the purposes of these Regulations include full-time courses for a first degree, for the Diploma of Higher Education, for the Higher National Diploma or Higher National Certificate, for the further training of teachers or young and community workers, for certain professional examinations, and full-time courses of initial training for teachers (regulation 5(1) and Schedule 2). Such courses must be of at least one academic year’s duration, and be provided at least in part by an institution or institutions in the United Kingdom which are maintained or assisted by recurrent grants out of public funds (regulation 5(1)). The Secretary of State may designate other courses by administrative act from time to time (regulation 5(9)).

Students are required to apply for a loan for maintenance not later than one month before the end of the academic year in question unless the Secretary of State is satisfied that an extension of time should be granted (regulation 6(4)). They must agree to repay any amount paid in excess of the amount to which they are entitled and any moneys lent to them with interest and applicable charges and penalties (regulation 6(3)). They may apply to borrow such amount not exceeding the relevant maximum amount as they wish. Where the amount of loan to which a student is entitled is increased, for any reason, that student may apply for a further loan up to that maximum amount (regulation 6(9)). If a student has not applied for the maximum amount first time he may apply once more for a further amount, but not so that the relevant maximum amount is exceeded (regulation 6(11)). Such further applications must also be made not later than one month before the end of the academic year, or if the student makes an application following notification of increased entitlement the application may be made within one month of the notification (regulation 6(10) and 6(12)).

Students may be entitled to transfer their entitlement to a loan if in certain circumstances they transfer course (regulation 7). A loan is normally granted for the period ordinarily required to complete the course (regulation 8(1)), although an extension may be granted (regulation 8(2)).

Students are required to provide the Secretary of State with such information as he requires (regulation 9(1)). They must also notify him if specified events occur (regulation 9(2)).

The Regulations specify the maximum loan payable to students. That maximum sum is calculated on the basis of where the student is living and studying (regulation 10). The Secretary of State has discretion to determine that an individual should be eligible for the higher or lower maximum figures if his, or his parents', circumstances merit it (regulation 10(3) to (5)). Provision is also made for students undertaking courses that are longer than average to be eligible for higher maximum loans (regulation 10(9) and (10)). Certain specified categories of student will be eligible for a lower maximum loan (regulation 10(11)). The Secretary of State has power to take account of the student’s income and that of his parents and spouse in determining the maximum loan that he will be entitled to (regulation 11).

A student who has applied to borrow the maximum amount in relation to an academic year and received at least one instalment, may apply for a hardship loan of not less than £100 and not more than £250 (regulation 12(1) and (2)). He must first satisfy the Secretary of State that due to exceptional financial hardship he may not be able to continue to attend for the balance of the academic year (regulation 12(3) to (4)).

Loans payable to eligible students shall be paid in three, two or one instalment, depending on whether the first instalment is paid during the first, second or third or fourth period of the academic year respectively (regulation 13(2) and (3)). For the purposes of the Regulations the academic year is divided into four periods regardless of whether the year has terms or semesters, the periods beginning on 1st August, 1st January, 1st April and 1st July (regulation 2(1)). The timing of the payments is determined by the Secretary of State (regulation 13(1)).

Payments of instalments will not be made once a student has withdrawn from, abandoned or been expelled from his course (regulation 13(5)). In the case of absence from the course for more than 60 days as a result of illness, or for any period for any other reason, the Secretary of State may decide to suspend payments or to continue to make them if suspension of them would cause exceptional hardship (regulation 13(6) and (7)). When payments are suspended and the student returns to his course the Secretary of State may pay further instalments, but the overall amount lent for the year must not exceed the amount the Secretary of State considers appropriate, in light of the length and circumstances of the absence (regulation 13(9)).

Provision is made for recovery of overpayments (regulation 14). If the Secretary of State is satisfied that the overpayment occurred as a result of information supplied by the student he may deduct the overpayment from loan payments in another academic year or grant to the student, or by taking other action (regulation 14(1) and (3)). In any other case the overpayment will be treated as a loan properly made but the overpayment may be deducted from loans otherwise payable in any other academic year (regulation 14(2)).

Provision is made for the interest which the loans will bear, which is calculated daily and compounded monthly (regulation 15). In accordance with section 73B(6) and (7) of the 1980 Act the prescribed rate is no higher than that which the Secretary of State is satisfied is required to maintain the value in real terms of the outstanding amount of loans, and does not exceed the rate specified for the purposes of exemption of certain consumer credit agreements by the Consumer Credit (Exempt Agreements) Order 1998.

Borrowers may repay their loans at any time without penalty (regulation 16(1)), but shall not be required to repay any moneys they owe before 6th April 2000 (regulation 16(2)). Before then it is intended that regulations providing for the repayment of loans through the tax system will be made, and provision for repayment by persons not subject to that system will also be made. The liability of a borrower will be cancelled if he dies, if he is not in breach of any obligation to repay any student loan and he reaches the age of 65, or if he receives a disability related benefit and the Secretary of State is satisfied that because of his disability he is permanently unfit for work (regulation 16(3)).

Instalments of student loans paid or payable after the commencement of a student’s bankruptcy, or in Scotland the sequestration of his estate, shall not form part of his estate, and accordingly cannot be claimed by his trustee. The student will not be discharged from liability to repay loan repayments received after sequestration when he is discharged under or by virtue of section 54 or 75(4) of the Bankruptcy (Scotland) Act 1985 (regulation 17).