In late 2013, the Government sold the last 17 per cent of the ‘old student loan book’, the student debts of 1990-1998. These debts were worth £890m at the time, a value which would have increased over the years with interest. However, they were sold for just £160m, a figure which is, at most, 18per cent of the books’ actual value. This long-term loss, over £730m, was ignored in favour of a short-term reduction of the budget deficit, because George Osbourne vowed to eradicate it by 2015.
Thus far, students who took out loans after 1999 have been safe from this measure, including those who have been paying the maximum £9,000 tuition per year. However, this is about to change. Next year, potentially sooner, the government will be selling off the remainder of the debt. Awareness of the issue is startlingly low.
Last year’s sales were made to a bespoke company called Erudio Student Loans, which was set up by Wilmington Trust SP Services, which in turn is part of the huge US banking group M&T. The sales were guaranteed not to affect the amount owed, the interest, or repayment schedule, yet this provision is not in place for the new sale. This means all students would be left vulnerable to the designs of a private agency. A hushed-up report made by the Rothschild Bank suggested a retrospective increase of the cap on interest rates, or worse, the removal of the cap entirely. With it already standing at 6.3per cent above inflation for 2013-14, and tuition costs higher than ever, the effect would be crippling. To enact such a measure would amount to a retrospective, further spike in fees, and not one that students can opt out of.
Furthermore, other terms could be changed, such as the rate of repayment and the income thresholds. Most importantly, with our financial fates in the hands of a limited firm, the Government would no longer be accountable for problems and injustices, and the power of students to prevent harsh measures is made negligible. Erudio Student Loans will stand amongst the likes of ATOS.
However, the Student Assembly Against Austerity has called a National Week of Action, in the week beginning 3rd Direct Gov website, currently standing at around 17,000 signatures, whilst a campus petition is being run by the university’s Labour branch. There is still time to act.
Students have been the target of rising costs and decreasing financial support throughout the coalition’s term. When we were in college, we lost EMA; when we were applying to university, we faced a policy reversal and tripling fees. When we leave university, our job prospects and jobseekers’ support are both insecure. Each reform has been met with waves of protest and anger, and victories have yet to come.