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Last Updated: Tuesday, 3 February, 2004, 08:09 GMT
More students declare bankruptcy
Graduation ceremony
Three times more students wrote off student loans by declaring themselves bankrupt in 2003 than in 2002.

According to the Student Loans Company, 899 filed for bankruptcy last year, compared with 276 in 2002, 249 in 2001, 97 in 1998 and eight in 1992.

A number are thought to have taken advantage of a loophole in government legislation allowing student loan debts to be cancelled out by bankruptcy.

The government is to close the loophole as part of the Higher Education Bill.

Cancelled out

Last week the bill was passed by a narrow majority of 316 votes to 311, after 72 Labour MPs voted against plans for university top-up fees.

Some rebel MPs have vowed to fight on as the bill goes through its next stage in Parliament.

MPs are now likely to spend two to three months going through the bill line-by-line in its committee stage.

Opponents of the bill are concerned about fees that will add debts of around 9,000 to the 12,000 in student loans already owed by a typical university graduate.

Insolvency Service guidelines say student loans are on the list of debts that can be cancelled out by bankruptcy.

But that will no longer be the case if the bill becomes law as expected by the end of July.

Higher Education Minister Alan Johnson released the Student Loans Company figures in response to a written question from Liberal Democrat education spokesman Phil Willis.

Mr Johnson's department stressed later that bankruptcy was "not an easy route to clearing debts" - it could have an adverse affect on graduates' employment prospects, earnings and credit rating.

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