On 6 February, the Department for Education confirmed plans that it would begin to sell parts of the English student loan book. The department initially announced the policy in an autumn statement.
The initiative is “part of a drive to sell assets in a way that secures value for money for taxpayers.” However, the move has placed Jo Johnson MP and the Department for Education under sharp accusations of failing to protect students. Students’ associations specifically have challenged the plan, citing fears that the sale will affect repayment.
The sale of loans has begun with the 2002-06 loan book, which has a face value of £4 billion. In its official press release, the government said that it hopes to return £12 billion to the Exchequer.
Currently, repayments do not begin until graduates earn at least £21,000 per annum in England. Although the move will see the financial value of loans transferred to external private investors, it is expected that the Student Loans Company (SLC) will be running repayments as normal. According to official statements, there will be “no changes to the terms and conditions of the student loans sold.”
However, there have been reports of a former student whose loans were sold to Erudio. The company then demanded repayment regardless of the legal capped minimum earning wage. Several students also attempted to defer payment on the grounds of earning less than £21,000 annually but being refused.
Erudio was later forced to apologise, and the government issued a statement reassuring students that the changes should not affect them. Ms Johnson has also argued that the sale should continue to have “no impact” on loan holders. These comments come directly after the cut of £0.3 billion of education funding in the 2016-17 fiscal year, as well as the removal of maintenance grants.
The sale was criticised by National Union of Students Vice President Sorana Vieru, who stated it was “outrageous” and the government wants “to sell our education on the cheap.” Sales will primarily impact English students; those who use the Scottish loan system will not be affected. Shadow Universities Minister Gordon Marsden MP has expressed his fears that this will further decrease applications to British universities, which he says have fallen down five per cent
since the Brexit vote.