The privatisation of student loans - stay tuned
By Pamela Head,
Last Friday, a group of protesters set up camp outside the University of London Union as part of a nationwide objection against the proposed privatisation of student loans.
Why, I hear you ask? Well, the government’s latest plan to raise money is to sell off public assets to make money. One of these plans involves selling off the student loan book to a private company. While this sounds fairly boring and innocuous, it could in fact have devastating consequences for anyone who took out a student loan between 1998 and 2012.
As over half of student loans are never paid back fully, the investment itself is not a very appealing one. So the government has to add little incentives to try and entice a buyer. But unlike the tactics used by universities to lure in Freshers, like free pizza and pens, the government is suggesting removing the cap on interest.
This means that anyone who originally took out the loan with the promise of low interest rates during repayment could suddenly have the goalposts moved and be facing an ever-increasing mountain of debt. You’ll still be paying it off long after you thought you’d finally finished.
As the proposal would date back to loans issued in 1998, this means that people in their 30s now could even be affected by this. It’s not exactly what we signed up for, is it.
Toni Pearce, president of the National Union of Students, said the union was seeking to ensure that current student loan terms and conditions are “written into legislation, particularly if the student loan book is to be sold off”.
In other words, that the terms can’t be changed after the fact. But as it hasn’t yet been confirmed whether this will happen or not, higher interest rates are an ominous black cloud floating above our heads still.
This story is something that has been conveniently hidden amongst other bigger news stories and hasn’t been given the attention it should. So we at theunipod say if you took out your loan pre-2012, make sure you keep a close eye on this as it develops. I know I will be.