The Coalition Loan Sharks: Privatisation of Student Loans Now Certain

March 3, 2014 10:30 am

Recent government legislation has confirmed another coalition-enforced blow to higher education. Currently, any student who has purchased a loan post-1990 faces further monetary concerns and debts after they leave university.


As we all know too well, an atypical UK or EU undergraduate who commenced their studies in 2012 will end up with a £27,000 repayment bill. However, in recent weeks, the coalition has confirmed that by 2015, a substantial proportion of student loans will be privatised.

In politics, selling loans to a private market has been branded a ‘win-win situation’ for the coalition government. Auctioning each loan off to the highest bidder, the government is able to sell the loan for just 10% of its original worth.

The benefits to students, however, are considered non-existent. If a private bidder purchases your student loan, once you have graduated, interest rates will become their responsibility. For example, if a private owner charges interest of 5%, your loan repayments after graduation will creep up to 5% more every month or year, according to your salary.

NUS officials now feel it is perhaps “misguided” to consider university as a public service, as it has been historically. The government is not content with the financial return of previous methods; hence, the effect on students is unlikely to be positive.

Privatisation will, in effect, reduce undergraduate applications, restrict access to education and, in the long run, encourage employment over higher education opportunities.

Experts suggest that privatisation doesn’t just affect current first and second year undergraduates – the coalition has passed legislation that insists all loans purchased from 1990 will be sold to private owners.


By pricing all loans at a grand sum of £10 billion; buyers will compete for the best prices. Under the influence of the coalition, inquirer’s purchasing habits could also be sweetened by a subtle push on the interest-rate cap.

Unfortunately, the reality is laid bare in a series of bills passed in February: students are likely to be plagued with debt at least for the first few years of employment.

By 2015, previous promises of negotiated terms and smaller repayments for students will rise out of government hands and could potentially wreak havoc with student finance beyond graduation and into working life.

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