Current students and recent graduates will be paying more for their education than they expected, under plans revealed by Lib Dem MP Danny Alexander.
The Chief Secretary to the Treasury mentioned the planned sale of the student loan book in a House of Commons speech before the parliamentary recess, the implications of which are now becoming clear.
“We will take action to sell off £15bn worth of public assets by 2020. £10bn of that money will come from corporate and financial assets like the student loan book.”
The government is now set to to privatise student loans, which may well mean higher repayment rates and increased interest. The most likely buyers of these will be insurance companies and pensions funds, particularly concerning for students because of the suggestion to lift the cap on loans taken out between 1998-2012. Recent graduates and current students will likely be paying significantly more for their university tuition than they were told to expect.
Students paying the £3k tuition fees were told that the interest on their loans would track the Retail Price Index measure of inflation and therefore the debt wouldn’t grow in real terms, but under these plans the cap on interest rates is expected to be lifted, forcing greater debt. This proposal seems to highlight the issue of the government losing money rather than saving it due to the student loan system. Notably, a recent survey suggested that 85% of students will never repay their loan in full.
Responding to the plans to privatise loans, ex-NUS president Liam Burns complained about how unresponsive the government had been during negotiations.
“Despite pushing them to establish in law that conditions on student loans could not be altered retrospectively, the government refused and instead gave weak assurances that they had no plans to do so.”
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