Today's Queen's speech saw the government confirm the sale of debt owned by the Student Loans Company to private companies. The ?sale of students loans bill? gives permission for the new minister of students, Lord Triesman, to sell part of the SLC's student loan portfolio, including personal information. Around £6bn is expected to be made over the next three years from the sale over next three years, with the total value of the student loan book is sitting at £18billion. If government targets are to be met the value of student loans deb will rise to over £55bn over ten years.
The NUS has expressed concerns that this will lead to students being charged higher rates of interest on their loans. Currently the interest is linked to inflation, so theoretically you only pay back what you borrow. A rise in interest rates on student loans could have disastrous consequences for graduates. Questions were also raised about why the government has chosen to take this course of action. The NUS president, Gemma Tumelty, believes that this shows that the student loan system is unsustainable in the long term. "Recent events in the US show the risks associated with selling off debt and the consequences it can produce in the wider economy," Ms Tumelty said.
The government insists that this will not affect students, and that it would retain control over all interest rates and repayment thresholds. All loans would still be administered through the Student Loans Company, and purchasers will only have information for managing the loans.