Disappointment and concern: students’ unions threaten action against government sale of loans worth £900m

Student loans sold off by government. Pic: Student Loans Company

Student loans sold off by government. Pic: Student Loans Company

Students’ unions across the EastLondonLines boroughs expressed disappointment and concern last week, as the government unveiled its decision to sell-off student loan debts worth £900m to a private company.

The sale consists of unpaid loans taken out by students in the 1990s. According to government sources, the sale has netted £160m, just a fraction of the face value.

Howard Littler, Campaigns Officer of the Students’ Union at Goldsmiths College, said: “So tuition fee debt triples, investment in education dwindles, and the only people benefiting from any of this are private investors who buy £900m worth of debt for £160m.”

He added: “Not only does this make no economic sense but you’re also selling out a generation of young people to make a quick buck in time for the 2015 general election.”

However, University and Science Minister David Willetts has claimed that “The sale of the remaining mortgage-style student loan book represents good value for money.”

The mortgage-style loans in question require borrowers to repay in fixed rate installments. Willetts added: “The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans.”

Michael Chessum, leader of the National Campaign Against Fees and Cuts, highlighted how this is a small first part of a bigger planned sell-off of £40 billion’s worth of debt – the biggest sale of student loan debts to date. Current loans and future loans are not affected and their sale is not planned for the moment, but Chessum seemed worried that this could become a possibility in the next few years: “Government will be loaning £10bn a year, this is economically not viable”.

The Minister has announced that terms and conditions of the loans affected will not change, which includes interest rates. Regulation of the latter would need to be approved by parliament. Chessum however suggested that he “anticipated” legislation in the near future could allow the upping of interest rates: “When you’re looking at economic drive, it will always lead there.”

Sarah Sarwar, President of Queen Mary Students’ Union, echoed his preoccupations for the future. Referring to speculations over future sell-offs and potential changes in interest rates, she said: “It’s really concerning, particularly for Queen Mary students as we subscribe to the widening participation scheme. Queen Mary has a wide range of students from varied backgrounds. Such a sell-off would inevitably affect a group of students who already find higher education very expensive.”

No official date has been set for a student demonstration, but student representatives agreed that nation-wide action is likely to happen during the spring term, most likely in February.

University staff and students are however set to strike on Tuesday, 3 December after an unresolved negotiation over pay. UCU, UNISON and Unite will protest against the failed improvement of a proposed 1% pay rise which, they say, equals a 13% pay cut since 2009 when considering inflation.

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