GRADUATES who default on student loans could be blacklisted for credit if a proposed shift in policy gets the go-ahead.

The Government's Student Loans Company wants to change the rules so that it can pass on details of bad debtors to credit reference agencies.

The loans company is currently not allowed to identify graduates to banks and other financial lenders if they default on their loans.

Students face being stopped from obtaining mortgages, personal loans or credit cards until they repair their bad credit.

Loans company chief executive Ralph Seymour-Jackson said a "change in attitude" had led to him requesting the Department for Education and Skills to approve the plans.

He said: "First, this is a debt to the taxpayer and needs to be collected.

"There is also the issue of responsible lending where banks need to have a full picture of the debts a borrower has in order to make the right lending decisions.

"We should play our part in this."

He added: "I suspect in the early days this was viewed as a very different sort of debt."

More than 59,000 students are understood to be in arrears, with bad debts standing at £162.5m.