Monday 06-02-2017 - 12:03
Higher Education Minister Jo Johnson, has today announced that the government intends to move forward with a sale of some outstanding student loans. But who’ll be affected and why does it spell bad news for both students and the public?
Those affected by the sell-off will be students who entered repayment between 2002 and 2006, and who have not already repaid the full balance.
As NUS understands, the sale will affect only those graduates living in England at the time they applied for their student finance.
If the sale goes ahead, those graduates affected will not see any change to the administration of the loans. Repayments will still be collected via the taxation system or directly by the Student Loans Company (SLC), and the SLC will still be the graduate’s point of contact, and provide annual statements and other services. However, the SLC will transfer the repayments to whichever private investment company has bought the loan from the government.
Responding to the news, Sorana Vieru, NUS Vice President (Higher Education), said: “The government are pulling yet another ugly move on students. The selling off of tranches of the student loan book to the highest bidder for less than it’s worth is economic illiteracy. It doesn’t just penalise students and graduates, it is physically taking money from the public purse which could and should be spend spent on services over the long term.”
Why is the sell-off such a bad idea?
The government argues that selling public assets like the student loan book is the right thing to do, as it will receive a quick injection of cash from the buyer, which it can use to reduce the national deficit or pay for other costs.
Meanwhile, the private investment company who purchases the debt will make money over time on its investment by receiving more in repayments in the long run than it pays initially.
NUS strongly opposes the sale of the student loan book because we do not believe private investment companies – especially those who contributed to the financial crash of 2008 – should make profit from students’ education.
NUS is also against the move because it is not in the interests of the public more broadly. Selling loans for less than the government would ultimately receive in repayments means that we will all pay higher taxes or see cuts to public services in the future – an idea described as “economic illiteracy” by the Financial Times.
“Selling the loan book to investors is privatisation through the back door. It is outrageous that bankers will profit on off the backs of graduates who took out loans because they had no other option. The government wants to sell our education on the cheap and this is only the first step.
If it becomes the norm for student loans to be sold to private investors, rather than held by government, it will be all the more tempting for governments to subject future students to extortionate interest, commercial terms and conditions and the raising of the repayment threshold, making loans even more attractive to private interests, but all the more harder for new graduates to economically contribute to society.”
- Sorana Vieru, NUS Vice President (Higher Education)
NUS has further concerns that today’s announcement may shape future student loan terms and conditions against the goal of selling off loans, rather than putting the interests of students or higher education in mind.
While other graduates and current students are currently unaffected, the government intends that this sale would be followed by further sales of other loans, especially those taken out by students who started their courses before 2012 – details of which remain to be seen.
How can you take action?
We believe that the government aqre getting a bad deal, and one which we’ll have to pay for. We can’t let Theresa ‘Del Boy’ May and Philip ‘Rodney’ Hammond get away with it.
Whether you’re a student affected by the sale, or the general public, we’re asking you to write to your MP today using the form below and ask them to oppose the selloff.