Government begins sale of student loans book
The government has started a sale process for part of the Student Loans Company book ̶̶̶̶̶̶ which has a face value of around £4bn
The sale, expected to take several months, covers loans issued under the previous system that operated until 2012. Specifically, it will include the accounts of customers who entered repayment between 2002 and 2006.
The previous system meant universities could charge a tuition fee loan of up to £3,465 a year, post-2012 this fee can now be up to £9,000.
This sale will also comprise the future repayments on the outstanding balances on a selection of loans. It also forms part of a strategy announced in last year’s Autumn Statement.
In written parliamentary statement issued this week, Joseph Johnson, minister of state for universities, science, research and innovation, said: “Selling the loan book involves securitising the remaining future repayments on the loans and selling securities representing the rights to these to a range of purchasers.
“The house will be informed if and when a sale is completed.”
The government said its decision to launch this process is consistent with its fiscal policy and approach to asset sales which is to sell assets where it is value for money.
Johnson said in the statement that the government is committed to cutting the deficit, reducing debt, and “living within our means as a country”.
The parliamentary statement says the position of all graduates, including those whose loans are part of a sale, would also not change as a result of the sale.
It also says that the purchaser of the loan books will have no right to change any of the current loan arrangements or to directly contact borrowers.
Johnson said the government’s policies towards student finance and higher education are not being altered by this sale.
The government will only sell the book if it receives what it called “value for money” in the written statement.
It will assess whether it gets value for money on the sale, by comparing the value of payments received by retaining the book, with the immediate proceeds from a sale.