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November 22, 2013 / politicsbitesize

Privatising Student Loans

ncafc-logoOn Wednesday this week, thousands of students from across the UK held protests against the Government’s proposed privatisation of the student loan book.  The day of action was called by the National Campaign Against Fees & Cuts (NCAFC), a UK wide network of education activists, who played a key role in organising student demonstrations against the tripling of tuition fees in 2010 and 2011.

The move to privatise student loans was first announced in June 2013 by Danny Alexander, the Chief Secretary to the Treasury.  In his speech he confirmed that the Government was to take this measure as part of a plan to raise £15bn from sales of public assets.  He told the House of Commons:

We will take action to sell off £15 billion worth of public assets by 2020. £10 billion of that money will come from corporate and financial assets like the student loan book. And the other £5 billion will come from land and property.

In order to attract investors and to receive a good price, the Government will offer financial sweeteners such as lifting the cap on the interest paid by people who took out loans between 1998 and 2012.  According to The Guardian‘s Aditya Chakrabortty and the False Economy network, a confidential Government report from 2011 proposed retroactively changing student loan agreements.  The report states that, ‘at the moment, the cap on student debt taken out before 2012 keeps repayment rates at 1.5%. Lifting it would mean a rate of 3.6%, in line with RPI in March 2012’.

Ahead of the protests this week an NCAFC spokesperson, Mike Shaw, said it is criminal that, ‘the government thinks it can quietly get away with pushing a whole generation of students further into debt to provide easy profits for hedge funds and banks’.  He added that the move, ‘will directly add years of further repayments to millions of students and graduates. Needless to say, the backlash against this could be massive’.

An Early Day Motion against loan privatisation has so far been signed by 35 MPs.  To check whether your MP has signed it go to: http://www.parliament.uk/edm/2013-14/542

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