Student Loan Contract
Entering into a Student Loan Contract
Students applying for a Student Loan must sign a Student Loan Contract. This is a contract with the Crown.
This means either signing a paper Student Loan Contract, or 'accepting' a Student Loan Contract online.
Parental consent
For students under 18 years of age, a parent must generally provide parental consent.
Students under the age of 18 cannot accept a Student Loan Contract online, as a parent is generally required to provide parental consent.
Parental consent is an administrative requirement and therefore is not part of a Student Loan Contract.
Enforceability where student is under 18 years of age (a minor)
Under the Student Loan Scheme Act 2011, students under the age of 18 (a minor) must be treated, for the purposes of the Contract and Commercial Law Act 2017, as if they are 18 years of age.
What is in the Student Loan Contract?
The contract sets out the terms and conditions of a Student Loan, including:
- the current interest rate and when interest is charged
- the annual repayment threshold
- the repayment rate
- the student's obligation to provide the information to MSD or Inland Revenue necessary for the management of their Student Loan
- the establishment and administration fees
- the student's right to cancel the loan contract within 7 working days of the date of the initial Loan Entitlement Advice (LEA)
- changes to eligibility
- the transfer of loan debt to Inland Revenue for collection
- the right to object to any amount borrowed and transferred to Inland Revenue for collection
- the parts of a Student Loan
- repaying a Student Loan
- notices
- who is responsible for the Student Loan
- the applicable law and that in the event of a conflict between the contract and the Student Loan Scheme Act 2011, the Act applies
- offences
MSD has a responsibility to ensure that students who ask, are given correct and complete information about the Student Loan Contract and the obligations it contains.
What is a contract?
A contract exists when:
- the offer of something of value by one party is accepted by the other party
- there is an intention to create a legal relationship and
- there is certainty over the terms of the legal agreement
When any of these things are missing or in doubt, the court, if asked to rule on the existence or enforceability of a contract, may determine that there is no contract, and therefore the contract obligations cannot be enforced.
Situations that may arise regarding the enforceability of a Student Loan Contract
Situation | Requirement |
There is doubt about the capacity of a student to fully understand the contract - in particular, applicants who may have an intellectual disability | It will depend on the facts of the case. Seek further advice, including legal advice |
The student has used a preferred name rather than their legal name on their contract | Their legal name must be used to avoid uncertainty and therefore legal risk |
The student has not signed the contract | The contract must be signed by the student |
The student's name has been misspelled on the contract | A minor misspelling of the student's name is unlikely to invalidate the contract |
Parental consent is either missing or has been completed by someone other than a parent | As the parental consent is an administrative requirement, the contract is still valid and enforceable |
For more information see:
Legislation
- Minors' contracts subpart 6 Contract and Commercial Law Act 2017
- Certain information must be disclosed in loan contract section 13 Student Loan Scheme Act 2011
- Loan contract enforceable against minor section 205 Student Loan Scheme 2011
