Government challenged over plan to privatise student loans

Ministers are facing a strong challenge to their plans to privatise student loans, with academics and student campaigners criticising the proposals. The policy is part of a wider government plan to sell off around £3 billion worth of assets.

The government have tried to dampen criticism by insisting that the plan would not lead to higher loan repayments.

However, the University and College Union (UCU), which represents academic and teaching staff, said that ministers have not made a clear case for the sale.

“The government has tried to sell off parts of the student loan book before, but not gone through with it because it didn’t feel the taxpayer would get a good deal” said UCU General Secretary Sally Hunt.

She warned against moving “towards a system with a commercial rate of borrowing.”

In response, Ralph Seymour-Jackson, Chief Executive of the Student Loans Company (SLC) insisted that “The government suspended the loan sale in the past because the economic conditions were not right - they never said they wouldn't do it”.

However, the Liberal Democrats’Shadow Chancellor, Vince Cable, suggested that the conditions for selling off student loans are particularly bad at present, with the economic situation meaning that the government would be able to sell only for a low price.

“This is not a good time to sell assets” he insisted.

The news comes amidst a row over severe delays in paying out loans in recent weeks. Over a quarter of first-year students did not receive their initial loan instalment on time.

The delay is likely to be particularly difficult for students from lower-income backgrounds. The National Union of Students (NUS) reports that “many thousands of students have been left without the money they need for rent and food at the start of term”.