Bond villain?

V-c warns of credit crunch over funding plan

July 18, 2013

A plan that groups of universities could issue bonds to raise funding for postgraduate student loans was criticised at a round table in London last week.

Developed by Jon Wakeford, director of strategy and communications at university estates company University Partnerships Programme, the scheme would make use of universities’ stable risk profiles to source money from financial markets at low rates, which they could offer to postgraduates using their own lending criteria.

At the event, organised by the thinktank Demos on 11 July, Mr Wakeford said he estimated that universities would be able to provide funding at roughly half the cost of existing career development loans.

But Dame Glynis Breakwell, vice-chancellor of the University of Bath, said that taking out certificates of debt, which guarantee repayment plus interest at a later date, could be a step too far for universities.

Institutions were already using their status as a “jolly good bet” to borrow capital for investment and to reassure the pension regulator that they have the means to meet the requirements of the University Superannuation Scheme, she said.

“What I see as a vice-chancellor is a series of things being stacked, one on top of another, which assumes that we are a good credit bet…and what Jon wants me to do is add another one on top of that. And I’m getting twitchy,” she said.

David Willetts, the universities and science minister, also suggested that the scheme might fall foul of rules that say that individual borrowers must be assessed for risk.

“It is surprisingly hard to design a scheme that is neither full-blown conventional public spending nor a commercial scheme subject to financial services regulation,” the minister added.

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