Background of the Invention

The present invention relates to a method, and apparatus for use in administering a loan for an individual participating in a study program, and in particular for use in calculating a loan value based at least in part on a future expected income for the individual.

Description of the Prior Art

The reference in this specification to any prior publication (or information derived from it), or to any matter which is known, is not, and should not be taken as an acknowledgment or admission or any form of suggestion that the prior publication (or information derived from it) or known matter forms part of the common general knowledge in the field of endeavour to which this specification relates.

When participating in study programs, individuals often require financial assistance in order to meet ongoing living and study program related expenses. Several types of financial assistance are available, such as credit card debt, special purpose student or campus loans, and unsecured personal loans.

In the case of financial assistance provided by governments and not-for-profit organisations, these resources typically allow students to borrow up to a pre-set limit, which is usually a standard amount based on the study program. Repayments are then made by the individual when they start work, with the loan amount remaining outstanding and accruing interest until the loan is repaid. For example the HECS/HELP program provides a system for deferring tuition fees. This is taxpayer funded and limited to the cost of tuition fees set by legislation. Scholarships are provided by numerous governmental and not-for-profit agencies, but particularly at the undergraduate level the scholarships rarely cover more than a small percentage of total living costs incurred by the student and scholarships are generally available only to students within the very highest levels of achievement. Welfare payments may also help to meet some of the costs of living but are generally set close to the poverty line and are insufficient to meet the true cost of studying. Thus, government and not-for-profit finance is typically limited (both in availability and sums available) and is therefore usually insufficient to meet the full costs of studying, whilst scholarships can be withdrawn leaving students without an ongoing means of financial support.

Alternatively, loans may be funded privately. However, this is a risk for the entity financing the loan, so often the loan includes harsh terms in the event of failure to repay the loan, and applies interest at commercial rates, meaning individuals often cannot afford to make the loan repayment, or are required to pay very high proportions of their incomes very shortly after finishing their courses to meet the repayments.

Thus, all of these techniques have significant limitations, and in particular fail to provide: (1) enough finance to students to meet a substantial proportion of the actual costs of study; (2) a sufficient period of time within which to repay loans or provide adequate consideration for financial accommodation; or (3) a reasonable period of deferment between the time of the financier providing the financial accommodation and the student providing consideration in return, to allow the students income to reach a sufficient level to provide such consideration without financial hardship.

The effect of the above mentioned issues is that finance is inaccessible to a large proportion of students, and commercially unattractive to those who are able in a position to obtain access. As a result, large numbers of students are unable to access a tertiary education through lack of funds.

A very wide array of investment products are currently marketed by a large number of fund providers. Those products include equities, managed or pooled funds, bonds, derivatives and a wide range of other products. Some products are linked to the performance of groups of products, such as stock indices.

However, there is currently no method for investors to directly invest in and generate profit or income from income earned by natural persons, or in particular through increases in income levels relative to inflation. A number of reasons contribute to a lack of financial products in this space. For example, most jurisdictions prohibit ownership interests in natural persons (which is akin to slavery), meaning that such proposals have suffered from lack of enforceability. Many proposals have required government intervention or subsidy to operate. For example, it has been proposed that governments make payments to needy groups (such as farmers, persons on paternity or maternity leave or students) in return for those persons paying (through the taxation system) a proportion of their income once their income reaches a certain threshold. Those proposals have required the taxpayer to bear the risk of the recipients never repaying the money, or only repaying it after a long period of time. An absence of reasonable time limits within which to provide consideration for the financial accommodation disregards the time value of money. Further, the proposals have not established a method to make payments enforceable in the hands of private sector entities. Rather they have relied upon the funding being provided by the state, and the proposals do not create a state of affairs whereby sufficient funds are recovered from the student to generate a commercial return on the financial accommodation given.

The lack of a workable model to provide a profitable mechanism for the private sector to provide financial accommodation to students had led to a lack of allocative efficiency in that insufficient funds have been made available to willing students to gain a tertiary education.

Summary of the Present Invention

In a first broad form the present invention seeks to provide a method for use in administering a loan for an individual participating in a study program, the method including, in a processing system: a) determining a predicted income at least in part based on the study program; b) determining loan repayments at least in part using the predicted income; c) determining a loan value at least in part using the loan repayments; and, d) causing the individual to agree to pay at least part of their future income on the basis of the loan value.

Typically the method includes, in the processing system: a) determining a loan period; and, b) using the loan period, at least one of: i) calculating a loan value; ii) calculating repayment values; and, iii) receiving loan repayments from the individual.

Typically the loan period includes at least one of: a) a payment period during which loan payments are made to the individual; b) an abeyance period during which no payments or repayments are made; and, c) a repayment period during which loan repayments are made by the individual.

Typically the method includes, in the processing system, determining the predicted income based on income earned by other individuals participating or who have participated in a similar study program.

Typically the method includes, in the processing system: a) determining the study program; b) determining an average income of graduates of the study program; and, c) estimating the predicted income using the average income.

Typically the method includes, in the processing system determining the predicted income for a repayment period.

Typically the method includes, in the processing system determining the predicted income based on an expected growth in average income.

Typically the method includes, in the processing system, determining the loan value at least in part using a risk adjustment, the risk adjustment being indicative of a risk the individual will default on loan repayments.

Typically the method includes, in the processing system, calculating the predicted income using the risk adjustment.

Typically the method includes, in the processing system: a) determining a repayment cap for the individual; and, b) determining the loan value using the repayment cap and the predicted income. Typically the method includes, in the processing system: a) determining a target rate of return; and, b) determining the loan value using the loan repayments and the target rate of return.

Typically the method includes, in the processing system, generating loan documentation, the loan documentation including an indication of at least one of: a) the loan value; b) loan payments; and, c) the loan repayments.

Typically the loan documentation includes, an assignment of future income on the basis of the loan value.

Typically the method includes, in the processing system: a) determining when loan payments are to be made; b) causing the loan payments to be made; and, c) recording an indication of the loan payments made.

Typically the method includes, in the processing system, during a repayment period: a) determining required loan repayments; and, b) generating a loan repayment notification, the loan repayment notification being provided to the individual.

Typically the method includes, in the processing system: a) determining a current salary for the individual; and, b) determining the required loan repayments using the current salary.

Typically the method includes, in the processing system: a) receiving an indication of a loan repayment; and, b) recording an indication of the loan repayment made.

Typically the method includes, in the processing system, establishing a loan account for the individual.

Typically the method includes, in the processing system: a) generating loan details, the loan details including contact information for the individuals; and, b) storing the loan details in a memory.

Typically the processing system includes a processor for executing instructions stored in a memory, and typically the method includes in the processor, determining at least one of the predicted income, loan repayments and a loan value.

In a second broad form the present invention seeks to provide apparatus for use in administering a loan for an individual participating in a study program, the apparatus including a processing system for: a) determining a predicted income at least in part based on the study program; b) determining loan repayments at least in part using the predicted income; c) determining a loan value at least in part using the loan repayments; and, d) causing the individual to assign future income on the basis of the loan value.

Typically the apparatus includes a processor for executing instructions for at least one of: a) determining the loan value; b) determining repayment values; and, c) generating loan documentation.

Typically the apparatus includes a memory for storing an indication of at least one of: a) instructions for execution by a processor; b) loan account details, the loan account details including contact information for the individual; c) the loan value; d) repayment values; e) incomes for other individuals that have participated in the study program; f) loan payments; and, g) loan repayments.

Typically the apparatus includes an input device for receiving an indication of at least one of: a) the study program; b) a loan period; and, c) contact information for the individual.

Brief Description of the Drawings

An example of the present invention will now be described with reference to the accompanying drawings, in which: -

Figure 1 is a flow chart of an example of a process for use in administering a loan;

Figure 2 is a schematic diagram of an example of a distributed computer architecture;

Figure 3 is a schematic diagram of an example of a processing system;

Figure 4 is a schematic diagram of an example of an end station;

Figures 5 A to 5D are a flow chart of a second example of a process for use in administering a loan.

Detailed Description of the Preferred Embodiments

An example of a process for use in administering a loan will now be described with reference to Figure 1.

In this example, at step 100, a predicted income for an individual is determined, based at least in part on a study program in which the individual is participating or proposes to participate. This may be achieved in any suitable manner, but in one example can be based on an average income determined for individuals that have previously participated in a similar course, and in another example can be based on data obtained through surveys or similar investigations.

At step 1 10, loan repayments are calculated based on the predicted income. The loan repayments are calculated by using the predicted income to determine what the individual is likely to be able to pay.

The repayments and/or the predicted income may also take into account other factors, such as a risk of the individual defaulting on payments, an expected increase in predicted income between the time of the calculation and when repayments are to be made, a loan period and a cap on the size of the repayments that can be made, or the like, as will be described in more detail below. At step 120, a loan value is calculated at least in part on the basis of the loan repayments. In one example, the loan value is calculated to provide a target rate of return, or profit for the loan. This can be used to account for losses on loans not repaid in full, as well as to allow investors who supply the capital to operate the loan scheme to recover a profit, as will be described in more detail below.

At step 130, an agreement for future payment of some of the individual's income is then obtained, allowing the loan value to be recovered when the individual has finished the study program. In one example, the agreement forms part of loan documents, which are executed by the individual to allow the loan to be provided, although this is not essential and a separate agreement may be used.

In one example, the agreement is an equitable assignment of future income, and is structured so that the loan is only repaid once the individual commences work, with the repayments being based on the individual's income, so that an individual with a low income may not be required to make full loan repayments. However, this is not essential, and any suitable agreement may be used, such as an assignment, contract or other similar transaction document.

Once the loan documents have been provided, the process may also optionally involve making loan payments at step 140, and recovering the loan repayments in accordance with the agreement at step 150.

Accordingly, the above described process allows loans to be provided for individuals participating in study programs such as one or more study courses. The loan value is calculated based on the expected income capacity for the individual, which is in turn based on the course of study in which the individual is involved. The loan is structured so that if all anticipated repayments are made, a profit is earned by the investor, and additional profit is made if the individual earns more than the anticipated amount of income. The profit is sufficient to allow investors to gain financially in return for providing the capital necessary to operate the loan scheme, as well as to allow recovery of losses from other loans that are not repaid in full. This allows the loan to be structured so that individuals who do not work and/or do not earn sufficient income to allow full repayments to be made, are not required to repay the loan in full.

Such features can lead to a significant number of benefits.

For example, operating loan schemes typically requires a significant amount of investment in order to acquire the required capital for lending. In standard arrangements, low profit margins and the risk of failure to retrieve loaned funds makes investing in such schemes undesirable, meaning that state or other government funding is often required. As a result, the available funds are limited, and often provided in restrictive arrangements that are undesirable for students.

In contrast, arranging the loan on the basis of an agreement such as an equitable assignment of future rights helps ensure recovery of the loan value in circumstances where individuals are able to, but refuse to pay. It is not necessary to seek to enforce the repayments against the student's assets, as the equitable assignment gives the investor an interest in the student's ongoing income stream. This helps maximise the rate of loan repayment, making the loan scheme more appealing to operate and invest in. The equitable assignment can also act as an asset for the entity operating the loan scheme, which in turn can assist with seeking investment, and help for accounting purposes, which also makes the operation of the loan scheme more appealing. In one example, allowing investors to make a profit can also further enhance the desirability of investing, further increasing the capital available for the scheme.

Ensuring a large capital base not only increases the amount of loans that can be made available, but also helps reduce the risk associated with the loan scheme. For example, if only a small amount of loans are made, the scheme is sensitive to individual loans that are not repaid, whereas for a large number of loans, variations in rates of repayment can be easily accommodated.

A further benefit of the above described process is that by accounting for the fact that loans may not be repaid in full, this allows loans to be offered on the basis that full repayment is only required in the event that the individual has a sufficient income after completing their study programme. This avoids pressure on students completing study courses to seek a highly paid job immediately upon completing their study course in order to repay loans required to complete the study course, which in turn makes participating in study courses more appealing as individuals will be less concerned about the prospect of incurring debt during participation in the study program. This in turn should lead to an increase in participation in study courses.

In one example, the process is performed at least in part using a processing system, such as a suitably programmed computer. Whilst this can be performed on a stand alone machine, in one example, this may be performed by one or more processing systems operating as part of a distributed architecture. An example of a distributed architecture will now be described with reference to Figure 2.

In this example, a base station 201 is coupled via a communications network, such as the Internet 202, and/or a number of local area networks (LANs) 204, to a number of end stations 203.

In use, the base station 201 includes one or more processing systems 210 that are used to administer loans, whilst the end stations 203 can be used by individuals to apply for loans and perform other tasks such as reviewing a loan balance and/or making loan repayments. In this case, the individual can either be the loan recipient, or a representative of a company administering the loans on behalf of loan recipients, as will be appreciated by persons skilled in the art.

In one example, access to loan services is provided through the use of web pages hosted by the base station 201. Accordingly, in this example, each end station 203 is typically a processing system that is adapted to access the web pages and transfer data to the base station 201. However, this is not essential and any suitable arrangement may be used.

An example of a suitable processing system 210 is shown in Figure 3.

In this example, the processing system 210 includes at least one processor 300, a memory 301, an input/output device 302, such as a keyboard and/or display, and an external interface 303, interconnected via a bus 304 as shown. In this example the external interface 303 can be utilised for connecting the processing system 210 to peripheral devices, such as the communications networks 202, 204, databases 211, other storage devices, or the like. Although a single external interface 303 is shown, this is for the purpose of example only, and in practice multiple interfaces using various methods (eg. Ethernet, serial, USB, wireless or the like) may be provided.

In use, the processor 300 executes instructions in the form of applications software stored in the memory 301 to allow different loan processing operations to be performed, including, for example, calculating loan values, repayments or the like, as well as to optionally allow communication with the end stations 203, for example through the hosting of web-pages. Accordingly, it will be appreciated that the processing system 300 may be formed from any suitable processing system, such as a suitably programmed computer system, PC, web server, network server, or the like.

As shown in Figure 4, the end station 203 includes at least one processor 400, a memory 401, an input/output device 402, such as a keyboard and/or display, and an external interface 403, interconnected via a bus 404 as shown. In this example the external interface 403 can be utilised for connecting the end station 203 to peripheral devices, such as the communications networks 202, 204, databases 211, other storage devices, or the like. Although a single external interface 403 is shown, this is for the purpose of example only, and in practice multiple interfaces using various methods (eg. Ethernet, serial, USB, wireless or the like) may be provided.

In use, the processor 400 executes instructions in the form of applications software stored in the memory 401 to allow communication with the base station 201, for example by implementing browsing software to allow browsing of web-pages hosted by the base station 201. Accordingly, it will be appreciated that the end stations 3 may be formed from any suitable processing system, such as a suitably programmed PC, Internet terminal, lap-top, hand-held PC, mobile phone, or other communications device, which is typically operating applications software to enable data transfer and in some cases web-browsing.

An example of a process for administering a loan will now be described in more detail with reference to Figures 5A to 5D. In this example, at step 500, the individual provides an indication that a loan is required. This may be achieved in any one of a number of manners depending, for example, on the particular underlying architecture used to implement the loan scheme. Thus, for example, if this is implemented on a standalone computer system, the individual may be required to provide an indication that a loan is sought to application software being executed thereon.

Alternatively, in a distributed architecture, it would be typical for the individual to utilise one of the end stations 203 to access web pages hosted by the base station 201. The web pages can include selection options, allowing an individual to indicate that they wish to apply for the loan as part of the scheme, and may also provide additional information regarding the loan scheme, such as an explanation of the manner in which the loan operates.

At step 510, the individual provides required information. The required information may be provided in any appropriate manner and in one example this could be achieved by entering information into a form presented as part of one of the web pages hosted by the base station 201, using the end station 203, and in particular the input/output device 402.

The nature of the required information will depend on the information needed by the loan scheme operator in order to administer the loan. Typically the information required will include at least an indication of the study programme in which the individual intends to participate, as well as an indication of a desired duration for the loan. Additional information may also be required, such as contact information regarding the individual, thereby allowing the scheme to uniquely identify the individual for the purpose of providing loan payments and collection of loan repayments.

The duration of the loan is typically selected from one of a number of "Relationship Periods" which represents the term of an agreement between the individual and investors in the loan scheme. In one example, each Relationship Period can contain three roughly equal time periods, including:

• a payment period during which loan payments are made to the individual;

• an abeyance period during which no payments are made; and,

• a repayment period during which loan payments are made to the individual. In one example, default lengths are as set out below, although it will be appreciated that this is for the purpose of example only, and that in practice any suitable duration could be used:

• Six year program - two Payment Years, one Abeyance Year and three Repayment Years;

• Ten year program - four Payment Years, two Abeyance Years and four Repayment Years; and,

• Fifteen year program — five Payment Years, five Abeyance Years and five Repayment Years.

Payment Years are the years during which loan payments are made to the individual. Abeyance Years are those during which no payments are made, and this is to allow the individual to enjoy and build up their income before they begin providing consideration for repayments. The Repayment Years are those years during which the individual assigns the defined percentage of their income to the loan scheme operator or an investor as consideration for the loan.

However, it will be appreciated that any appropriate loan duration may be used, depending on the preferred implementation.

At step 520, the base station 201, and typically the processor 300, determines an average income of individuals that have participated in the indicated, or a sufficiently similar, study programme. The manner in which this is achieved will depend on the implementation, but in one example the base station 201 retains information regarding salaries for ex-students in the database 211. In this instance, the processor 300 can query the database 211 and retrieve information regarding salaries of previous students, utilising this to calculate a relevant average income. However, this is not essential and alternatively pre-existing average data may be obtained from a suitable source, using any appropriate technique.

As a further alternative, the average income could simply be estimated based on general knowledge of the industry in which the individual is likely to work, or could be based on an average for the relevant jurisdiction in which the individual is based without taking into account the study programme in which the individual is studying. However, it will be appreciated that in general the more information used, the more accurate the average will be, hence making the process more robust.

At step 530 the processor 300 calculates a predicted income using the average income. In particular, the predicted income is typically calculated on the basis of a compound interest formula applied to the average income. In one example, the formula is stored in the memory 301 or database 211, with this being retrieved by the processor 300 for use. The formula takes into account a general increase in salaries that will occur for example due to inflation or other economic factors. Accordingly, it will be appreciated that a student graduating now into a particular job will typically have a lower starting salary that a student having similar qualifications and starting a similar job five years in the future.

An example compound interest equation is set out below:

I = (PI(I +m)yi) + (PI(I +m)y ₂ ) + (PI(I +m)y ₃ ) ... Where:

/ is the income in the future years;

P/ is the average income of a graduate of the individual's chosen course of study at the time of the application; m is a multiplier, which is based on a trend rate of wage growth in a relevant country or jurisdiction plus a premium or discount to adjust for the level of demand for persons with the individual's chosen qualification, and can be either positive or negative; and yu y _2> y ₃ ■ ■ ■ are the relevant repayment years.

Once the predicted income has been determined, a risk adjustment is determined at step 540 with the risk adjustment being applied to the predicted income at 550, typically by the processor 300. The risk adjustment is used to take into account the risk of full loan repayment not occurring.

Thus, for example, there is a risk that the individual will not complete the course, may die before or during the Repayment Period, may leave the jurisdiction and be uncontactable, may cease working permanently or temporarily, may be imprisoned, may become unfit or too infirm to work or may intentionally seek to avoid repayment obligations.

This risk adjustment is typically used to reduce the predicted future income I for the individual, thereby taking into account the likelihood of individuals failing to make full repayments.

The risk adjustment is typically applied as a percentage and is determined based on a number of factors, such as demographic information, the nature of the course being studied, or the like. Thus, for example, if a particular study programme has a high dropout rate, this may result in a high risk factor being associated with that study programme. Similarly, drop-out rates may vary for different geographical locations, as well as for other demographic factors.

Accordingly, in one example, the base station 201, and typically the processor 300, determines the risk adjustment by selecting from a list of pre-defined risk adjustments that are stored in the database 211, or the memory 301, based on the course of study demographic information, or the like. However, any suitable technique may be used.

It should be noted that the use of a risk adjustment is not strictly required, but is useful in ensuring the robustness of the process, and in particular protecting against repayment failures. However, alternative techniques could be used to achieve a similar effect, such as determining a low estimate of average income, or alternatively such protection may not be required, depending on the circumstances in which the process is used.

At step 560 a repayment cap is determined for the individual. The repayment cap is a percentage of the individual's income used to limit the maximum value of repayments to ensure that the individual is not unduly adversely affected upon completion of the study programme. In particular, this helps avoid scenarios in which individuals finishing study have to pay all or the majority of their salary towards loan repayments which as previously discussed is an undesirable situation.

The cap is typically set subjectively based on an assessment of a fair and reasonable maximum amount which an individual could afford to assign in consideration for the loan. Higher or lower figures may be appropriate in different circumstances, particularly in relation to cost-intensive course which are likely to lead to above-average incomes, such as a graduate medical degree. In one example, this can therefore be provided by an operator, for example using the input/output device 302, or can be retrieved from the memory 301 or database 211.

At step 570 the base station 201, and typically the processor 300, calculates a total repayment amount. The total repayment amount is calculated based on the repayment cap as applied to the predicted income, which in turn is used to work out a total repayment amount over the repayment period.

At step 580 the base station 201, and typically the processor 300, determines a target rate of return ("TRR") for the loan. The target rate of return represents the amount of funds that the loan scheme operator would make as a profit for a loan that is successfully repaid.

Thus, to provide a fair return to investors for providing the loans, the loans must be set at a figure such that during the repayment period, the individual is repaying the loan amount plus a fair rate of return on the funds provided by the investor. The target rate of return is typically variable and can be determined by factors such as the availability of loan capital, market demand, or the like.

In one example, a TRR of 8% per annum (compounding) is applied, but any suitable value may be used. In one example, this can therefore be provided by an operator, for example using the input/output device 302, or can be retrieved from the memory 301 or database 211.

At step 590 the target rate of return is used by the processor 300 to determine a loan value. The loan value represents the maximum amount of money which may be loaned to the individual, and accordingly, is a value lower than the total repayment amount to thereby provide for the target rate of return.

Having determined the loan value at step 590, the processor 300 can calculate loan payments at step 600 allowing the base station 201 to present an indication of the loan value, the loan payments and the repayments to the individual at step 610. The manner in which the presentation is performed will depend on the preferred implementation, but this will typically involve having the base station 201 present the information to a user via a secure web-page, so that this can be viewed using the end station 203, for example using the input/output device 402.

At step 620 the base station 201 determines if the loan terms have been accepted. Acceptance is typically indicated by having the user select an appropriate option presented on the website, as will be appreciated by persons skilled in the art. Assuming acceptance of the loan, then at step 630, the base station 201 operates to generate loan documentation. The loan documentation sets out the formal terms and conditions associated with the loan and in particular, includes details of the loan payments and repayments which are required. In addition to this, the loan documentation typically incorporates an agreement, such as a contract or assignment, representing an equitable assignment of a user's future income. The loan documentation may be generated in any suitable manner. Thus for example, this could be prepared manually by an operator. Alternatively it could be based on a template stored in either the memory 300 or database 210, with the processor 300 populating the template based on the information determined during the process described above, as would be appreciated by persons skilled in the art.

At step 640 the user is then required to execute and return the loan documentation, allowing the loan to be provided. It will be appreciated that in the event that the loan documentation is not executed and returned as required, then it will not be possible to provide the loan to the individual.

The manner in which execution of the document occurs may depend on the preferred implementation. Thus, in one example, the user may be required to print the document, sign the document, optionally in front of a witness, and then return a hard copy of the executed document to the loan scheme provider. Alternatively, execution of the document may be achieved electronically through the provision of an appropriate electronic signature or the like.

Accordingly, it will be appreciated that by executing the loan documentation, the individual and the loan scheme operator enter into a contract whereby the individual agrees to assign in equity to the loan scheme operator a fixed percentage of their future income in consideration for the loan. If the individual elects to receive the maximum loan, the individual agrees to assign the maximum percentage of future income calculated above, although this is not essential and the student could elect to borrow and hence assign less.

Once it has been determined that the loan documentation has been executed, the base station 201 can operate to administer the loan, although this is not essential and this could be performed wholly or in part using other techniques and/or systems, such as existing loan administration systems.

In administering the loan, the scheme operator may establish a loan account to assist the individual with managing the loan, although this is not essential. In this regard, as the loan documentation includes an agreement in respect of future income, there is no debt, only an obligation to pay certain amounts of money in the future, and hence such a loan account may not be required.

In this example, at step 650 the base station 201 determines a next loan payment to be made, based on the fixed percentage of the individual's income that is allocated for repayment. This is typically performed by the processor 300 based on information, such as the loan account, stored in the database 210 or the memory 301. At step 660, the base station 201 causes the loan payment to be made and records an indication of the payment. The payment may be made in any appropriate manner, such as Electronic Funds Transfer, cheque, banker's draft or the like, as typically indicated within the loan documentation, and could be achieved using a payment system executed by the processor 300.

At step 670 the base station 201 determines if all payments have been made and if not returns to step 650 to determine when a next payment is due. Once it is determined, however, that all payments have been made, then at 680 the base station 201 determines when loan repayments are due. In general, the loan period will include abeyance years during which repayments are not made and accordingly, this may not occur until some time after the final loan payment has been made.

Assuming a repayment is to be made, at step 690 the base station 201 determines the individual's current salary. This may be achieved in any one of a number of manners and may involve the base station 201 contacting the individual via an electronic communication means such as email, or by having an operative of the loan scheme contact the individual, for example via telephone or the like, and provide the information using a suitable technique, such as via the input/output device 402. Once the individual's current salary has been determined, the base station 201, and typically the processor 300, calculates a loan repayment amount based on the current salary and the repayment cap. Thus, it will be appreciated that if the individual's income is less that the predicted income, the repayment cap means that the repayment the individual makes is less than the repayment expected, thereby ensuring that the individual is not unduly affected by the lower than expected income.

At step 710 the base station 201 requests loan repayment for example by having the processor 300 cause a notification to be sent to the individual, using an appropriate technique, such as email, post or the like.

It should be noted that the above described technique for determining the salary or income of the individual is for the purpose of example only, and this could be achieved in other manners. For example, a notification could be sent to the individual's employer allowing the employer to automatically transfer wages on the individual's behalf. This could be performed on the basis of initial contract documentation, and not necessarily based on a repayment notification years into the programme.

At step 720, the base station 201 determines if the requested loan repayment is made, and if not, the process proceeds to step 730, allowing a repayment recovery process to be commenced, based on the assignment. This is typically achieved by having the processor 300 access account information via a payment system or the like. Thus, this can for example allow the individual to be prosecuted in a civil procedure, allowing the funds to be recovered. This is not essential however, and more typically initial steps would be taken using a debt recovery or the like, with court action only being taken in extreme cases. It will be appreciated however, that as the loan repayment amount is based on the current income of the individual, then in general, the income is sufficient to allow the repayment to be made without undue hardship, which in turn helps reduce the number of recalcitrant payers.

In the event that the payment is made then at step 740 details of the payment are recorded, for example by having the processor 300 update account information stored in the database 210 or the memory 301. The process then moves on to step 750 to determine if all repayments have been made. If all repayments have not been made then the process returns to step 690 to determine the current income for the next repayment. Otherwise, the process moves on to step 760 to end.

Accordingly, it will be appreciated that the above described loan scheme allows individual to obtain loans for courses or programmes of study, whilst reducing the concerns about undue levels of repayment being required upon programme completion. Additionally, by providing an equitable assignment of future income, this increases the likelihood of payment being recovered.

These factors, coupled with the ability to operate the loan scheme to cover not only costs associated with defaulted payments, but also to allow a profit to be made, also encourages investors to provide the necessary capital to operate the scheme. This ensures the scheme is of benefit to both students and investors, thereby helping ensure success of the scheme.

As a result, the above described loan scheme can provide a financial product which: (1) provides a significant sum of money to students as a proportion of their reasonable annual living and studying expenses; (2) allows for deferred repayment or provision of consideration so that the student's consideration payments are a reasonable proportion of his or her income; (3) generates a fair commercial return so that the funds can be sourced from the private sector.

Whilst the above example has been described with respect to a distributed architecture, this is not essential and the process could be performed using a stand alone computer system having the functionality of the base station 201. In this instance, operations performed via the end stations 203 in the above described process could be performed via the input/output device 302 of the base station 201, as will be understood by persons skilled in the art.

Persons skilled in the art will appreciate that numerous variations and modifications will become apparent. All such variations and modifications which become apparent to persons skilled in the art, should be considered to fall within the spirit and scope that the invention broadly appearing before described.