Government starts student loan sell-off

Submitted by Matthew on 8 March, 2017 - 9:15 Author: Mike Zubrowski

The government has begun the sale of the assets of the Student Loans Company. It claims this will save public money without making graduates pay back more, and without changing their terms and conditions. This seems unlikely.

The sale of the £4 billion of loans which were first eligible for repayment in 2002-6, is planned as the start of a process which will sell off more. A similar plan was abandoned in 2014 by Vince Cable, claiming that it would not achieve its stated aim of reducing government debt. Whilst this claim was true, it seems likely this was also in response to widescale protests against the planned sale.

To successfully sell them at the price desired — and reduce government debt — the loans have to be made more attractive to private buyers. To prepare for the sale, the government had already frozen the income thresholds at which students have to start repaying, and at which their interest rate reaches its maximum level, for at least five years until April 2021, a move which automatically increases the repayment burden as inflation proceeds.

A less likely option is that the government will simply use public money to guarantee private profit; not changing repayment conditions, but not reducing government debt.

The fear of being saddled with astronomical student debt already puts many working-class people off going to university. Making what many fear seem more likely — that those in debt will later be made to repay more than they initially agreed — can only exacerbate the barriers to education. The National Union of Students need to mount a forceful campaign to stop this sell-off.