Student debt – Unfair and Unnecessary
Student loan debt in the UK has risen to more than £100bn for the first time, underlining the rising costs young people face in order to get a university education.
According to the Student Loans Company, outstanding debt on loans jumped by 16.6% to £100.5bn (just England was £89.3bn) at the end of March 2017, up from £86.2bn a year earlier.
Rising student debts come at a challenging time for consumer finances in general in the UK, which are being squeezed as prices rise at a faster pace than wages.
Student debt is an additional drain on people’s resources for an “astonishingly long time”, sapping the purchasing power of the graduate population.
Following the introduction of the £9,000-a-year tuition fees there will be longer-term implications of rising student debts in the UK. As graduates respond to the rising debt crisis, it will affect their attitudes to pensions, savings, buying a house.
Although the Student Loan Company is a not-for-profit organisation owned by the governments UK, Scotland, Wales & N.Ireland, some of its debts are now being sold to private investors.
The government sold two tranches of the mortgage-style loans to investors. Firstly to Greenwich NatWest raising £1bn, and secondly to Deutsche Bank and the Nationwide Building Society, also raising £1bn. The SLC’s remaining mortgage-style loans, for which payments were mostly in arrears, were sold to a consortium, Erudio Student Loans (a consortium of private sector debt collectors and a private equity firm), in 2013 for £160m. In 2014, the government indicated that it would start selling the SLC’s £12bn book of 1998 – 2012 ICR loans to improve the UK public finances.