The Student Loans Company has concluded a £1.7bn securitisation for a student loan book, exceeding the Treasury’s expectations
This week Joseph Johnson, minister of state for universities, science, research and innovation, announced the loan book, which has a face value of £3.54bn, had been sold.
This securitisation covers loans issued under the previous system that operated until 2012. Specifically, it will include the accounts of customers who entered repayment between 2002 and 2006.
The previous system meant universities could charge a tuition fee loan of up to £3,465 a year; post-2012 this fee can now be up to £9,250.
In February this year, the government started the sale process as part of a commitment to cut the deficit and reduce debt to “live within our means as a country”.
The government said it would only sell the loan book if it received “value for money” – which was assessed by comparing the value of payments received by retaining the book, with the immediate proceeds from a sale. Johnson said the sale exceeded the HMT Green Book valuation.
Ministers will shortly be laying before parliament a report on the sale which will provide more detail on the sale arrangements and the extent to which they give value according to HM Treasury Green Book rules.
But for now, Johnson has announced the position of all borrowers, including those whose loans have been sold, will not change as a result of the sale.
Pam Tatlow, chief executive of MillionPlus, the association for modern universities, said: “It will be interesting to see if the government has offered an indemnity to the buyers of the student loan book in the event that it changes the rules under which the loans are repaid.
“However, rather than the proceeds of the sale being beavered away into Treasury coffers, it should be reinvested in higher education and more support for the students of today and tomorrow. The government removed their entitlement to student maintenance grants in 2016, saying that they were ‘unaffordable’. There could be no better use of the £1.7bn than to restore these maintenance grants with immediate effect.”