Any student who has to fill out the plethora of forms for their student loan will know how complicated the system can be. Well now there are questions about who is going to be in charge of our debt.
The students' secretary, Lord Triesman has announced the sale of over £18 billion worth of student debt to the private sector, nearly a third of the £55 billion the Student Loan Company (SLC) is expected to loan to students over the next ten years.
The Student Loan Company was responsible for almost £3 billion of loaned money during 2006; adding to the levels of debt the government is already in control of. The Government is planning to sell the debt to private companies to enable a reduction in overall debt owned by the government. Therefore bringing themselves fiscally into line with debt targets set by Gordon Brown.
The details of the sale were buried beneath weightier issues as part of the Queen’s speech. The move represents an ominous storm cloud for students, as firms in the private sector are much more likely to charge higher rates of interest on loans.
However the student secretary has insisted rates will remain at affordable levels with the National Union of Students clarifying that students and graduates who have already received loans should not be affected by the changes.
The NUS president and former student of Liverpool John Moores University, Gemma Tumelty, said: "Our primary concern is that individual borrowers - students and graduates - who have received loans, will not be affected by these proposals through changes in terms and conditions or increased interest rates.”
She continued to clarify matters by saying "We also hope that the confusion experienced by graduates last time the government sold student loans is avoided."
Though the government has strenuously repeated that it remains in control of loan arrangements and regulations, a large question mark hangs over the viability of a financial system which encourages long term graduate debt. The typical amount of money owed by a student on completion of their course, though variable for each of us, can be as much as £20,000.
According to a Downing Street document, the change would not mean a rise in the levels of interest we pay as students, because the Government would still be in control of the interest rates set for the loan repayments.
Charlie Baylis and Sam Wylie
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