The UK Government has announced that it has completed its first sale of the English student loan book. The sale raised £1.7 billion with a face value of £3.54 billion The sale included loans issued by English Local Authorities under the previous (pre-2012) system, specifically those that entered repayment between 2002 and 2006. The loan consists of 411,000 loans divided into four portfolios.
In a press release statement, the Government said ” Throughout the process, Government’s decision on whether to proceed remained subject to market conditions and a final value for money assessment. I can update Parliament that the transaction achieved a value of £1.7 billion, exceeding the HMT Green Book valuation. Ministers will shortly be laying before Parliament a report on the sale in accordance with Section 4 of the Sale of Student Loans Act 2008. This will provide more detail on the sale arrangements and the extent to which they give value according to HM Treasury Green Book rules.”
“The position of all borrowers, including those whose loans have been sold, will not change as a result of the sale. The sale does not and cannot in any way alter the mechanisms and terms of repayment: sold loans will continue to be serviced by Her Majesty’s Revenue and Customs (HMRC) and the Student Loans Company (SLC) on the same basis as equivalent unsold loans. Purchasers have no right to change any of the current loan arrangements or to contact borrowers directly. Those whose loans have been sold will be notified in writing by the Student Loans Company within 3 months, for information only. No action will be required. Government has no plans to change, or to consider changing, the terms of pre-2012 loans.”
Commenting on the sale Pam Tatlow, Chief Executive of MillionPlus, the Association for Modern Universities, said “It will be interesting to see if the government has offered an indemnity to the buyers of the student loan book in the event that it changes the rules under which the loans are repaid.”
“However, rather than the proceeds of the sale being beavered away into Treasury coffers, it should be reinvested in higher education and more support for the students of today and tomorrow. The government removed their entitlement to student maintenance grants in 2016, saying that they were ‘unaffordable’. There could be no better use of the £1.7bn than to restore these maintenance grants with immediate effect.”