Student loans may be sold to private sector

The government may use the sale of student debts to generate revenue, it has been claimed.

Gordon Brown is reportedly considering the sale of an estimated £16 million in student debt to private companies.

The move would mirror steps taken between 1997 and 2000, when £4.1 billion was raised through similar sales.

According to the Times, both Nationwide and the Royal Bank of Scotland are likely buyers of any new student debts, as both have bought student debts in the past.

Jonathan Loynes, chief UK economist at Capital Economics, told the Times the move “will help Brown to meet his sustainable investment rule, which stipulates that net debt must average less than 40 per cent of GDP over the cycle.”

And the newspaper speculated that buyers would be especially interested in the latest round of sales due to the recent changes in the way student loans are now repaid.

Once the borrower is in full-time employment and earning over the repayment threshold of £15,000 per year, deductions are made automatically from wages.

© Adfero Ltd

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