SQ Magazine

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OUTRAGE: Government sells student loans for £160m

Posted on Monday, 25 November by

Student Protest

Despite being faced with massive protests from students across the country last week, the government has confirmed its decision to sell off the student loan book for £160m to a private debt collector.

The student loan book has been purchased by a consortium called Erudio Student Loans for £700m less than the book’s face value of £890m. The government’s decision to accept such a low bid for the loan book indicates that the consortium feels only a slim portion of outstanding student loans will be repaid in full.

The book covers student loans taken out between 1990 and 1998. The deal means that repayments on student loans between this period will now go to Erudio Student Loans, as oppose to the government.

Speaking on the sale, Universities minister David Willetts said:

The private sector is well placed to maximise returns from the book which has a deteriorating value. The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans.”

Of the loans sold, only 14% of borrowers are currently repaying their student debt, with 46% of those affected earning less than the £28,775 at which repayment threshold kicks in.

NUS President, Toni Pearce, voiced the organisation’s anger at the sale:

The simple fact is that having these loans on the public books would be better off for the Government in the long run. Selling off the loan book at a discount to secure a cash lump sum now doesn’t make economic sense.”

Students remain concerned about speculation that the government could take out an option to raise interest rates on student loans taken out since 1998, in a bid to sweeten the deal Erudio Student Loans.

Ministers have assured borrowers that no changes will be forthcoming.

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Corey Pellatt
22-year-old editor of SQ Magazine and Media Studies student at the University of Sussex. Freelance writer for clients including BHAFC.

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