Earlier this month the government began plans to sell billions of pounds worth of student loans to private companies.
The controversial move, which has been highly criticised, was previously called off in 2014 by then business secretary Vince Cable, who decided the plans would not reduce public debt.
However, universities minister Jo Johnson has now decided to reverse that decision, with the sale expecting to recoup £12 billion for the exchequer. Graduates who took out loans between 2002-2006 will be the first to be affected.
Johnson defended the move and claimed it will have no impact on the students who have taken out loans, saying: “This government is committed to bringing public finances under control and returning the budget to balance.
“As part of this, we will look to sell assets where value for money to the UK taxpayer is assured. This sale will have no impact on people with student loans and will only proceed once we are satisfied that it represents value for money for the taxpayer.”
The National Union of Students and the Universities and Colleges Union have criticized the plans.
Sorana Vieru, NUS Vice President of Higher Education, said ‘Selling the loan book to investors is privatisation through the back door. It is outrageous that bankers will profit off the backs of graduates who took out loans because they had no other option.’
“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.”
70% of students are not expected to pay off their loans before they are written off in 30 years, compared to 44% of graduated in 2002, who had already paid off their loans within 13 years.
General Secretary of the UCU, Sally Hunt, joined the NUS’s criticism.
“The government has tried to sell off parts of the student loan book before, but not gone through with it because it didn’t feel the taxpayer would get a good deal. You can forgive our skepticism when the minister says people with student debts have nothing to fear.”