An eye-watering £2.7 billion-worth of student loans have been written-off this September as the Chancellor suffers a huge pre-budget blow.
Official figures show the first September hike in Government borrowing for five years as Savid Javid risks significantly overshooting borrowing targets for this financial year.
The Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, rose by £60 million to £9.4 billion year-on-year in September.
The borrowing hike comes despite the Government receiving a £1.1 billion dividend boost last month from part-nationalised lender Royal Bank of Scotland.
The ONS said borrowing was pushed higher due to seasonal payments of £2 billion for winter fuel and £2.7 billion for student loan write-offs.
Last year it was revealed the ONS would include student loans into its figures, which was expected to increase annual public sector net borrowing by 0.6 per cent of gross domestic product.
The size of student loans has soared since 2012 when the government increased the maximum amount that universities could charge English undergraduates to £9,000 a year, and also raised the interest rate to 3 per cent above inflation.
There are different rules for Scotland, Wales and Northern Ireland.
In total the government now lends students around £13 billion a year, more than double the amount lent in 2010/11, and the total amount outstanding is more than £100 billion.
But about 40-45 per cent of current lending and the interest due on it is unlikely to be repaid, the ONS projects.
In England and Wales, outstanding loans get wiped 30 years after graduating.
In Scotland it is 35 years and in Northern Ireland it is 25.
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