Government to privatise student loans

THE GOVERNMENT is to privatise all student loans taken out between 1998 and 2012, the Chief Secretary to the Treasury Danny Alexander has confirmed. Alexander confirmed that all student loans taken out in this period would be sold for £10 billion. The sale is expected to be finalised in 2015.

Crucially, whoever buys the student loan book will not be obliged to keep the low interest rates which students were originally guaranteed when they took out the loans. This means that graduates could end up paying competitive rates of interest on their loans.

NUS president Toni Pearce claims to have “secured a win” on the student loan book following a meeting with David Willetts, Minister of State for Universities and Science, in September.

After the meeting, Willetts wrote Pearce an open letter promising to cap interest rates on the loans should they be privatised. Crucially however, Willetts’ pledge has not been codified in law.

Under the terms of the 2008 Sale of Student Loans Act, a sale can be approved by Vince Cable and proceed without consent or consultation, and without a parliamentary vote.

Danny Alexander said in a speech to the House of Commons:

“We will take action to sell off £15 billion worth of public assets by 2020. £10billion of that money will come from corporate and financial assets like the student loan book, and the other £5 billion will come from land and property.”

“Mr Speaker, government is the custodian of the taxpayers’ assets. When we no longer need them, we should sell them back at a fair price – not act like a compulsive hoarder.”