Tuition fees and the scrapping of grants have generated £40 billion of student debt—and it is growing.
Most people wouldn’t describe this as an asset. But Lib Dem cabinet minister Danny Alexander is selling it as one.
He wants to privatise the student loan book by 2015 and claims the sale could raise £10 billion or more.
Many students can’t afford to repay their debts for years or even decades.
Governments have so far struggled to convince investors that they could make profits if they bought the loan book.
So they’ve tried to make the debt more attractive.
One government commissioned report suggested letting the loan book’s future owners jack up interest rates whenever they want.
This would let them effectively raise a student’s fees years after their course has ended.
Richer students who can pay fees upfront would be spared.
Another option would be to bail out the loan book owners if too many students can’t repay their debts.
As long as the government holds the loan book it is handing money to universities to set fees as high as they like.
And if it’s sold off, the government will subsidise the new owners.
The debt should be scrapped and higher education should be run as a free public service for all.