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£12bn added to deficit through student loans.

£12bn added to deficit through student loans.

A change in how student loans are recorded in the public finances will add £12bn to the deficit, following an Office for National Statistics ruling.

The amount expected not to be repaid, which could be 45% of lending, will be reclassified as public spending.

Student loans will now significantly push up the UK's deficit - providing an incentive to reduce tuition fees.

The government said the change would be taken into account by the tuition fees review, due to report early next year.

The decision by the statistics agency tackles an anomaly in which the cost of lending to students, to cover fees and maintenance, has been missing from the public finances.

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