Danny Alexander said something brief but potentially momentous in the Commons last week. "We will take action to sell off £15billion worth of public assets by 2020," he began. "£10billion of that money will come from corporate and financial assets like the student loan book."
This government, the government that led to the English university system joining the most expensive in the world, a decision that prompted mass protests on London's streets, has firm plans to privatise student finance. Scottish, Welsh and Northern Irish universities also charge large fees (especially to non-residents), and changes to the loan system will affect them equally.
It has the makings of an absolute scandal. And it is almost as much of a scandal that the mainstream media has ignored it (only the New Statesman ran a piece on it).
Now, it should be said that it is not absolutely clear what 'selling off the student loan book' actually means. Are we talking about privatising the entire student loan system, including the state-run Student Loan Company? That would be a disaster. At the outset, of course, we would get all sorts of promises that interest rates would be capped. But we all know how these things work. Within ten years there would be a free market in student finance, as there is in the USA. There are many things to admire about the US, but a nation where student debt exceeds one trillion dollars cannot be said to have nailed that particular issue.
Alexander's words could, on the other hand, mean that the collection of existing loans will be outsourced to private companies. It looks, at first sight, like the cuddlier option. There is precedent for this, and in fact legislation came in in 2008 to ensure that noone whose debt had been sold on would be adversely affected. But here too the implications are horrendous. Early in its term of office, as the Guardian revealed last month, the government commissioned a report from Rothschild investment bank (of all people!) into the financing of student loans. The report argued that 'investors' (sic) would be put off buying loans by the low interest rate caps. It proceeded to argue that there were two options: either remove the caps altogether, or to guarantee a higher return, using public money to make up the shortfall. This report is, according to the Guardian's sources, still being considered actively. Let's be clear about the implications: selling off student loans is likely to involve either scrapping the 2008 guarantees and raising interest rates retrospectively, or using tax-payers' money to subsidise the return to huge corporations.
Whichever route they are planning to take, the situation is deeply troubling. Higher education is the primary driver of social mobility in the UK. Huge fees are already a deterrent to many, but at least when they came in we were promised a benevolent, progressive loans structure. The involvement of the private sector in student financing can only damage that. Private companies want profits, and profits have to come from somewhere.
I have set up an online petition against loans privatisation, which you can sign here. Please share it. If you are or know a journalist, do make as much noise as you can. Write to you MP. If we catch this now we have time to make a difference.
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