At present, there are no rules that prohibit students from entering individual voluntary arrangements. Students and graduates alike often face the burden of personal debt. 3 years, if not longer of full time studying, which is often funded by a student loan. University fees and the cost of living can soon add up and a part time job simply won’t be enough to cover this.
This will often tempt students into applying for credit cards or loans to help out with the ever-increasing cost of living. With little or no income during the time at university, debts can often spiral out of control.
If debts exceed £15,000, most people can apply for an IVA – including students. The same rules apply and stipulate that the applicant must be able to afford the monthly repayments. However, student loans cannot be written off with bankruptcy or with an IVA due to the Enterprise Act of 2004. Before this Act was passed, many graduates would take advantage being able to get a clean financial slate by declaring themselves bankrupt.
Although bankruptcy will affect your credit rating for a substantial amount of time, many graduates were seeing it as a better alternative to paying off debt over a long period of time. This system was abused and as such, the Enterprise Act was introduced.
In short, students may be eligible for an IVA if they meet all the standard criteria that is needed by anyone else. However, any outstanding debt with the Student Loans Company will still stand.
