American students aren’t the only ones suffering from massive student loan debt. A loan for three years of university in the UK now costs £54,000 (that’s including interest, which starts as soon as students begin taking courses).
And after 30 years, students can then walk away from their loans—regardless of the outstanding balance—leaving taxpayers to foot the rest of the bill. To combat this problem (and attempt to fix public finances), BBC News reports that the British government is putting outstanding student loans up for sale to private investors. During the four-year plan, it will sell off any loans made before 2012 starting with loans made during 2002-2006. When all loans have been sold off, the government hopes to raise about £12 billion.
The Universities Minister points out that the sales will have no effect on the borrowers: monthly payments and conditions will remain the same and payments will still be collected through taxation and the Student Loans Company. The government will recoup the money it loaned out through private investors who will then collect the interest on the debt as income.
This isn’t the first batch of loans to be sold. Some experts say the UK government has no other choice but to continue selling off loans due to the state of its finances. In the meantime, many others believe this move will have negative repercussions for student borrowers. Some fear that their federal loans will be converted to private student loans; however, this fear is largely unfounded since federal benefits are guaranteed.
“This government never learns any lessons,” said Angela Rayner, Labour’s shadow education secretary. “This sale will do nothing to ease the burden of debt piled on students by the Tories who have trebled tuition fees and scrapped maintenance grants.”
image copyright Chris Beckett