In his Autumn Statement, Chancellor George Osborne said: “So today I can announce that next year we will provide 30,000 more student places – and the year after we will abolish the cap on student numbers altogether…The new loans will be financed by selling the old student loan book.” (News, 5 December.)
On 25 November, the Department for Business, Innovation and Skills announced the sale of the final tranche of the pre-1998 student loan book for just £160 million. Its face value is £890 million. This is a disastrous return for the public purse.
The National Audit Office published a report three days later, which estimates that the student loan book will be worth £200 billion by 2043 in today’s prices. This was published before the Autumn Statement, so with unrestricted student numbers the watchdog’s estimate could be too low.
How can Osborne raise sufficient money to fund additional student loans under current rules when £890 million of the loan book is only worth £160 million on the open market? He cannot.
The Autumn Statement paves the way for the abolition of subsidised interest rates on student loans. Only by removing this subsidy can the loan book be made sufficiently attractive to the private sector. And if such a change were brought in, it would surely affect everyone – even current borrowers.
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