The Guardian reported today on a confidential report commissioned by the government that proposed changing the terms for all pre-existing student loans taken out since 1998. The move would pull the rug from under the feet of a whole generation of graduates, lumping many with debts that might never be paid off.
It flies in the face of previous ministerial assurances that the terms of student loan repayments would not be changed.
To quote from the article:
The proposal to increase the interest rates on the £40bn worth of loans is the most controversial of a series of options contained in a Whitehall-commissioned study examining how the coalition could privatise the entire stock of student loans issued since 1998.
Increasing the amount that students would be forced to pay back would make the loans more attractive to buyers.
The document, prepared by Rothschild investment bank, was submitted to the business department in November 2011, but is understood to still be under active review. It has never been made public, or been seen by higher education professionals.
Any move to increase the interest rates on loans already taken out could add extra years of repayments even for those who left university long ago.
Andrew McGettigan, author of The Great University Gamble (Pluto, 2013) has been quoted in the Guardian‘s article:
The report was obtained by the False Economy website through a freedom of information request. Although over 90% of it was redacted, the blacking-out was light enough that virtually the entire report can be read. It was analysed for the Guardian by higher education analyst Andrew McGettigan.
“Many people have speculated about the problems associated with selling student loans,” said McGettigan, author of The Great University Gamble. “This is the first authoritative confirmation we’ve had that the main impediment to sale is the interest rate protection in place for existing borrowers. Under these proposals, this government will get cash now but borrowers or future governments pick up the tab.”
You can read the rest of the article on the Guardian website. To find out more about Andrew’s book, see the details below.
Money, Markets and the Future of Higher Education
A critical and deeply informed survey of the brave new world of UK Higher Education emerging from government cuts and market-driven reforms.
“Andrew McGettigan is in my opinion by far the most knowledgeable person in the country on the government’s obscure and yet revolutionary programme of change for universities. He provides us with a full and independent view of the short, medium and longer-term implications of the government’s plans. This book is essential and deeply worrying reading.” – Simon Szreter, Professor of History and Public Policy, University of Cambridge
“Andrew McGettigan is one of the most respected and incisive commentators on higher education. There are no other texts at present that address the political economy of higher education and none that put all the pieces of the jigsaw together to reveal the picture with such clarity.” – John Holmwood, Professor of Sociology, Faculty of Social Sciences, University of Nottingham, co-founder of the Campaign for the Public University and editor of A Manifesto for the Public University (2011)