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Student Loan Debt Put up for Sale

Posted by Richard Ward in , ,

Image courtesy of Flickr, Creative Commons

The UK government has begun the process of selling more student loan debt to the private financial sector.

Loans made to students in England between 2002 and 2006 will be included in the sale, which will be followed by other pre-2012 loans, with the aim to raise £12bn.

Although Universities Minister Jo Johnson said the sale would have no impact to those with student loans, the National Union of Students said it was an "ugly move on students".

The government has always aimed to sell the student loan book to private investors and over the next four years it will dispose of the loans from before 2012, when tuition fees in England were increased to £9,000 a year.

The new tranche of loans being put up for sale, dating from 2002 to 2006, come with a face value of £4bn and the government has promised that despite the sale there will be no changes to the terms and conditions for borrowers, ensuring the rate of repayment for former students remains the same.

Although Universities Minister Jo Johnson said the sale is part of the drive to bring public finances under control, the National Union of Students have warned it could begin a process in which loans are made more attractive to private buyers, at the expense of students.

Both Labour and the Liberal Democrats also condemned the plans.

Labour's shadow education secretary, Angela Rayner, said: "This government never learn any lessons, this sale will do nothing to ease the burden of debt piled on students by the Tories who have trebled tuition fees and scrapped maintenance grants."

However, Nick Hillman, director of the Higher Education Policy Institute, suggested there was plenty of misinformation about the sale of student loans and the main issue was ensuring good value for the taxpayer.