Ageing student loans sold to debt firms
The government has sold £890m of student loans to a debt management consortium for £160m.
Erudio Student Loans won the bid to buy the remaining 17% of mortgage-style loans taken out by students between 1990 and 1998.
Student leaders secured assurances from ministers the terms and conditions of the loans would not change.
Loans taken out by students paying higher fees of up to £9,000 a year are not covered by the sale.
National Union of Students president Toni Pearce said the move was “extremely concerning” as it would see “the public subsidising a private company making a profit from public debt”.
“The impact of this sale won’t only affect borrowers, but will affect everybody.
“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.”
These loans, superseded in 1997, “are a closed portfolio of ageing debts that are becoming harder to collect with time”, the Student Loans Company said in its 2013-14 business plan.
Universities Minister David Willetts said: “The sale of the remaining mortgage-style student loan book represents good value for money, helping to reduce public sector net debt by £160m.
“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.
“Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans.”
read more here: http://www.bbc.co.uk/news/business-25084744