To avoid that position, Clause 2 provides for loan agreements to set out in detail the core terms on time and manner of repayments, the specific method used in setting the annual interest rate and deferment and cancellation. At present we discuss those matters when we debate the relevant regulations each year. The terms will be frozen as they were at the time the loan was taken out. That is just one protection we are putting in place for existing borrowers. Clause 3 puts loans on a purely contractual basis, like any other commercial loan would be.
Buyers understand the working of contract law and relevant consumer legislation.
Under the existing legislation these functions can neither be transferred from the SLC, nor can decisions be made by the loans buyer. That makes for complex, unwieldy and expensive administration which would be unattractive to prospective purchasers who would probably not contemplate taking on the loans on that basis. The transfer of loans to the private sector means that the responsibility for loans administration will fall to the debt purchaser, as owner of the debt. But I can reassure noble Lords that the Bill does not reduce the rights of borrowers. On the contrary, borrowers' rights will be protected through the sale agreement which will require the purchaser to meet the same collection standards as the Student Loans Company, as a minimum.