As if students haven’t been mis-sold or mis-led enough by overpayments to and promises of non-materialising postgrad loans from the Student Loans Company as well as the Banks on student overdraft charges, now the news that the government has joined in the party too!!
Why? Well, the government quietly announced its plans recently to sell off your student loan, although they’ve been quick to dismiss concerns this will negatively impact graduates. The stated intention is to sell the student loan book in order to cut the national debt.
Let’s take a look shall we and go back to November 2013, when they announced that part of the student loan book was being privatised. Student loans worth £900 million made between 1990 and 1998 were sold off to Erudio, a company which has been criticised since for its handling of the debts.
Issues such as wrong forms and processing, loans being added to credit reports and taking money out of the accounts of those who were earning less than the minimum salary threshold for repayments to be made, caused undue stress and worry for many of the people with those loans.
Again, the government planned to sell off student loans made between 1998 and 2012, but Vince Cable in his role as business secretary decided to abandon the sell-off plans in July 2014 after he said the move would not achieve its aim of reducing government debt.
Three years on, the government is to start an auction in the next few months. The sell-off is expected to generate £12 billion for the exchequer. The universities minister, Jo Johnson, said the move would have “no impact” on student borrowers paying off loans, as terms and conditions would remain the same after the sale was completed.
However, there are many critics who believe the sale is not good news for students. Martin Wolf from the Financial Times has described previous sell-offs of student loans as ‘economic illiteracy’. Many are also sceptical of such assurances from the government, particularly as they have already moved the goalposts once on student loan repayments and there are significant doubts that the sale will actually result in value for money for taxpayers.
Funny or more outrageous is the fact that bankers will be the ones to profit off the backs of graduates from a government who encourages higher education, despite trebling the cost of attending university and now wants to sell education on the cheap.
The Independent newspaper even went as far to say in its headline “Student debt sale gives new generation a first taste of economic slavery” stating in its article that “each such sale turns education into debt slavery”.
The fate of new graduate is less than attractive as it is, with lower wages and lower job prospects and let’s face it, because of the intrinsic uncertainties in future loan repayments, anybody buying the debt will have to be incentivised to take the debt off the government’s hands otherwise it doesn’t make economic common sense.
So, can the universities minister, Jo Johnson, really be believed that this move will have “no impact” on students and graduates, who are already struggling with whopping debts of almost £40,000 when they leave Uni? We doubt it.