The coalition government had previously said that the expansion of student numbers following the removal of the cap in 2015-16 would be financed by the sale of pre-2012 student loans, which it estimated to be worth £12 billion.
But Mr Cable, the business secretary, who has faced criticism over the sale of Royal Mail, apparently announced the calling off of the loan sale at a meeting of Liberal Democrat activists at the weekend.
“The government was considering the sale of student loans on the basis that it would reduce government debt. Recent evidence suggests this will no longer be the case,” the business secretary told the Social Liberal Forum, according to The Guardian.
“Given there is no longer any public benefit, [deputy prime minister] Nick Clegg and I have agreed not to proceed with the sale.”
George Osborne, the chancellor, announced the abolition of student number controls in December’s autumn statement.
“The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential,” he told MPs.
A document published by the Treasury to accompany the statement added: “The additional outlay of loans over the forecast period will be more than financed by proceeds from the sale of the pre-reform income-contingent student loan book.”
Wendy Piatt, executive director of the Russell Group said: “If the government no longer intends to use the sale of the student loan book to fund the uncapping of student numbers in England, then we would urge them to abandon this idea.
“We would be extremely concerned if the substantial funds required to pay for additional students were taken from the already very stretched budget for research and higher education. It would be very worrying if this policy leads to less funding per student.”