Student loans
Section 257: Student loans under the 1998 Act: IVAs, and Section 258: Student loans under the 1990 Act: IVAs and bankruptcy
872.These two sections amend the Teaching and Higher Education Act 1998 (“the 1998 Act”) and the Education (Student Loans) Act 1990 (“the 1990 Act”) so that a student loan made to a borrower who enters an individual voluntary arrangement (IVA) will be treated in a similar way as it is currently treated under a bankruptcy in England and Wales. Section 258 also amends the 1990 Act by inserting bankruptcy provisions for Northern Ireland that correspond to those in England and Wales in regard to student loans.
873.IVAs were created by the Insolvency Act 1986. An IVA enables a debtor to avoid bankruptcy by coming to an agreement with creditors to pay off a percentage of his or her debts over a given period.
874.At present, the treatment of student loans under an IVA differs from their treatment under a bankruptcy in England and Wales. There are two types of student loan. The newer type of loan, known as an income contingent loan, is repayable by a borrower under the 1998 Act, and the older type of loan, known as a mortgage style loan, is repayable under the 1990 Act.
875.The 1998 Act excludes loans from a borrower’s bankruptcy debts, so that during and upon discharge from bankruptcy, the borrower remains liable to repay his student loan. Repayments are linked directly to a borrower’s income so the student debt will not need to be repaid until the borrower’s income is above the income threshold. Section 257 amends the 1998 Act to provide that similar arrangements will apply to student loans under an IVA as currently apply under a bankruptcy. This means that the liability of a borrower to repay a student loan will not be reduced when the borrower enters into an IVA.
876.Section 258 makes similar provision in respect of the 1990 Act, so that a mortgage style loan is not to be included in the voluntary agreement. This means that the liability to repay the mortgage style loan will not be reduced when someone enters into an IVA. In respect of Northern Ireland, section 258 inserts similar provision about IVAs and also makes provision about bankruptcy corresponding to the existing provision under that Act for bankruptcy in England and Wales.
877.These provisions apply to England, Wales and Northern Ireland.
878.Subsection (4) of section 258 amends Schedule 2 to the 1990 Act in respect of Northern Ireland. The 1990 Act provides that, in respect of England and Wales, a mortgage style loan is prevented from forming part of the estate of a person who becomes bankrupt and also from forming part of the bankruptcy debts where the loan was taken out in England and Wales. Subsection (4) makes similar provision in respect of Northern Ireland.
Section 259: Power to award foundation degrees: Wales
879.The Privy Council has power, under section 76 of the Further and Higher Education Act 1992 (“FHEA 1992”), to make orders that enable institutions providing higher education to grant one or both of two groups of awards. Institutions providing higher education can be given a power to grant awards to students who complete a course of study, or a power to grant awards to students who complete a programme of research, or both. These are commonly referred to as taught and research degree awarding powers respectively.
880.A number of further education institutions provide courses leading to foundation degrees. Originally, only institutions with full taught degree awarding powers could award foundation degrees in their own right. Section 19 of the Further Education and Training Act 2007 amended section 76 of the Further and Higher Education Act 1992 so as to enable the Privy Council to make orders granting further education institutions in England the power to award foundation degrees.
881.Currently foundation degrees provided by further education institutions in Wales are awarded by other higher education institutions with full, taught degree-awarding powers through franchise arrangements. This section amends section 76 of the FHEA 1992 so as to enable the Privy Council to make orders granting further education institutions in Wales the power to award foundation degrees.
882.As a result of this provision, further education institutions in Wales providing courses leading to foundation degrees will be able to apply for powers to award foundation degrees themselves. In order to be granted this power, institutions will have to meet certain non-statutory criteria, which will be published once the provision comes into force. As with taught and research degree awarding powers, the Quality Assurance Agency for Higher Education will advise on whether an institution meets the criteria.
883.Subsection (2) requires Welsh Ministers to lay before the National Assembly for Wales a report about the effect of the provision within four years of it coming into force.
884.The provision applies to further education institutions in Wales as defined under section 91 of the FHEA 1992, which only includes institutions conducted by further education corporations and institutions designated under section 28 of that Act. The new legal category of sixth form college corporation created by the Act does not apply in Wales.
Section 260: Complaints: Wales
885.This section amends section 29 of the Education Act 2002. Section 29(1) places a duty on the governing bodies of maintained schools to establish procedures for dealing with complaints. Governing bodies must publicise procedures under section 29(1)(b) and, in establishing and publicising them, governing bodies in Wales must have regard to guidance from the Welsh Ministers (section 29(2)). Currently, governing bodies have discretion to put in place whatever procedure they judge fit for handling complaints. This amendment gives a power for the Welsh Ministers to make regulations which would set out a complaints procedure that will become compulsory for all governing bodies of maintained schools in Wales. Such regulations are able to specify how and where this procedure should be published.
Section 261: Local Government Act 1974: minor amendment
886.This section makes a minor amendment to paragraph 5 of Schedule 5 to the Local Government Act 1974. The Local Commissioner may currently investigate complaints about maladministration by local education authorities in relation to their education functions subject to the exclusions in paragraph 5 of Schedule 5. The effect of this amendment is to provide that a complaint about special educational needs may be considered by the Local Commissioner, even where it may relate to conduct, curriculum, internal organisation, management or discipline of a local education authority maintained school.
