Student loan boss 'offered to resign'

"Misleading" letters were sent to more than 300,000 graduates

The chairman of the Student Loans Company offered his resignation after it emerged that graduates in arrears were being sent "misleading" letters chasing repayments.

This has been revealed by a written ministerial statement - which said that chairman Christian Brodie's resignation offer was rejected.

These letters were sent to 309,000 former students since 2005.

They appeared to come from "Smith Lawson and Company Recovery Services".

But this was a firm set up by the Student Loans Company, the agency which oversees the loan system for university students.

'Low cost alternative'

The ministerial statement from universities minister David Willetts said it was intended as a "low cost alternative to referring those graduates to third party debt collection agencies".

But the Office of Fair Trading said that this practice was "misleading because they created the impression that debts had been escalated for collection by transfer to a third party".

The Student Loans Company's method of chasing arrears emerged after the lender Wonga was accused of using letters that appeared to come from law firms. Wonga has agreed to pay £2.6m in compensation to about 45,000 customers.

A spokeswoman for the Student Loans Company said that they were not planning to make compensation payments or to write to apologise to individual customers.

The graduates in arrears could include those who have moved overseas.

Mr Brodie had given ministers a "clear and unequivocal apology", says the written ministerial statement, but it was not thought that a resignation was appropriate from a relatively new chairman, when the practice had been running for almost a decade.

The statement says that the Office of Fair Trading had contacted the Student Loans Company and the Department for Business, Innovation and Skills in February - but ministers were unaware until the "recent media coverage".

The Student Loans Company has now stopped sending these letters.

"It is important that the government recover taxpayers' money, but it must do so in a way which is fair," says the statement.