Critics are sceptical as Universities Minister claims the sale will have “no impact” on those paying off loans
Pre-2012 student loans are being sold as part of a £12 billion pound programme set to take place over the next four years. The first of the sales, announced on the 6th February, include loans that became eligible for repayment between 2002 and 2006.
The government assures the sale represents value for money for the UK taxpayer, claiming the process will work to repair public finances. The sale had been attempted by George Osborne, in the coalition government, who promised the sale would fund higher education and pay down the deficit. New conditions, however, do not entitle education to the proceeds, despite cutting university funding by £4 billion in 2015/16 to £3.7 billion in 2016/17.
Though the conditions of student loans and repayments have yet to change, critics worry the sale of education for private purchase will cause problems for borrowers. These concerns follow the sale of the pre-1998 student to Erudio in 2013 which left many bewildered by administrative errors.
Roughly 7,000 were affected by the company’s failure to send vital paperwork, including deferral forms, and unexpected demands for early payments. The sharing of customer data with credit reference agencies were amidst the complaints against Erudio as students originally sold the loans were told the debt would not appear on their credit records.
In the recent sell-offs, the administration of loans and collections will remain within the power of the student loans company.
The government’s claim the move will secure future repayments has failed to derail critics. Many fear the marketisation of the industry could enable private companies to use education as a profitable business in order to meet the original face value of the loans.
National Union of Students Vice-President, Sorana Vieru, has called the sale “an ugly move,” allowing bankers to “profit off the backs of graduates who took out loans because they had no other option.” Since the announcement, the NUS have begun a campaign to stop the sale.
Minister for Universities and Science, Jo Johnson, claims the sale will have “no impact” on those paying loans. Critics remain sceptical in light of the increasing financial demand placed on students. In 2015, the government announced plans to increase repayments for those who had taken out loans since 2012. This was not in accordance with the plans publicised when many students had taken out the loans.
Many worry the financial pressure being forced upon students will discourage those from low-income households to apply for university.
Chief Secretary to the Treasurer David Gauke said: “This sale makes sense for taxpayers and will play an important contribution in our work to repair the public finances.”
In response, critics have questioned the value of money to the taxpayer. This proved both difficult and controversial in both Gordon Brown’s selling of Government gold and Vincent Cable’s of Royal Mail.
The University of Manchester has refused to comment on the issue at this time.
The Education Officer of The University of Manchester’s Students’ Union, Emma Atkins, stated it was a “moral issue” that “money that could have contributed to public services is now going to line the pockets of the private sector”.
She further added that there is “already controversy over changing the terms of repayment once a student has started borrowing” and that it’s uncertain whether it’d be at the discretion of the companies not behave similarly. Atkins also highlighted how, even though the loans are from 2002-2006, this could “set a precedence and become the norm”.
During the last sale of the student loan book to Erudio, Manchester’s Students’ Union took a public stance against government proposals to privatise student loans.