MSE News: Government sells £900m of 1990s student loans

Former_MSE_Darryl

"Nearly £900 million of student loans taken out during the 1990s have been sold off by the Government..."

Read the full story:

Government sells £900m of 1990s student loans



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Pincher

Sounds like a tax deductible scheme for the company holding the loan book. They just write off some bad debts every year to offset against any profit they make, so they don't have to pay any corporation tax.

TurnUpForTheBooks_2

Universities Minister David Willetts says: "The sale of the remaining mortgage-style student loan book represents good value for money, helping to reduce public sector net debt by £160 million."

Oh but what about the worrying effect that 2012-on repayment plan 2 high limit high interest rate Student Loans are now having on average unsecured household debt figures also released today? How soon will it be, Minister, before the UK household debt pattern reflects the USA experience where Student Debt exceeds Credit Card Debt?

"The private sector is well-placed to maximise returns from the book, ..."

Right and what do you mean by that, Minister?

" ... which has a deteriorating value."

... and by that you mean that the outstanding loan balances are reducing so if you leave it any longer then there will soon be no saleable opportunities remaining to tempt private sector types to snap up the debt and use their private sector tactics to "maximise returns" ?

"The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans.

At rip off rates that bear no relationship to current mortgage rates, you mean, Minister, so that future tranches of Student Debt can be more easily and more rapidly sold off than any before them?

"Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans."

What borrowers? Do you mean borrowers from the 1990s or SLC borrowers generally? What protection?

While the mortgage-style loans have a face value of around £890 million, their market value is significantly lower.

Ah, so you are front-loading the sale to privateers by heavy discounts. No wonder they are well placed to maximise returns, Minister. You are well placing them :mad:

Of the 250,000 loans sold, around 46% are earning below the repayment threshold, 14% of borrowers are still repaying and 40% are not repaying their loans in accordance with their terms.

What mealy-mouthed use of English is this? Of which 250,000 loans sold over what period? Is this the 1990s loans again? What repayment threshold is being referred to? Who are the 40% not repaying their loans in accordance with their terms? Are you saying you are setting the dogs loose on 40% of the book, Minister, and that another 46% are not even worth setting any dogs loose on because despite a university education they are relative paupers?

Does this paragraph in fact mean that 86% of 1990s university students are incapable of or are deliberately avoiding repayment of student loans? Tell us more about this please.

No debt collector will ever call I suppose.

Pincher

If they can't recover debt from UK residents, what chance do they have from Polish and Ukrainian students. Last year, about 8 out of ten prospective tenants I interviewed were overseas students waiting for their UK student loan, so can I "wait a few weeks for the deposit". Mostly Polish and Ukrainian, but there were Africans too, probably through the Commonwealth connection.

Atidi

40% [representing 100,000 of the most highly educated people in this land] are not repaying their loans in accordance with their terms.

With a record like that, this government almost makes Paul Flowers look competent.

I suppose, however, Erudio Student Loans have plans to improve that figure, as 14% [number of borrowers who are still repaying] of £890m falls somewhat short of the £160m paid (and that's before recovery costs are taken into account).

Did Vince Cable order a baseball bat count at Erudio Student Loans before these loans were sold on to them?

Dunroamin

This is the last tranche of the pre 1998 "mortgage style" loans to be sold off. Apparently, 69% of these type of loans have already been repaid, which seems to me to be quite a reasonable percentage, particularly with the higher repayment threshold that applies.

Dunroamin

Pincher wrote: »

If they can't recover debt from UK residents, what chance do they have from Polish and Ukrainian students. Last year, about 8 out of ten prospective tenants I interviewed were overseas students waiting for their UK student loan, so can I "wait a few weeks for the deposit". Mostly Polish and Ukrainian, but there were Africans too, probably through the Commonwealth connection.

As neither the Ukraine nor any African countries are part of the EU, students from these countries are ineligible for UK student finance.

The_Groat_Counter

Dunroamin wrote: »

If you're really employed in student admissions, it's quite shocking that you don't know this.

The poster said he/she interviewed the students as "prospective tenants" - so the poster is a landlord, property management agent or such like.

Dunroamin

The_Groat_Counter wrote: »

The poster said he/she interviewed the students as "prospective tenants" - so the poster is a landlord, property management agent or such like.

Thank you for pointing that out - I'd completely missed it. I'll edit my post - apologies.

Dunroamin

Atidi wrote: »

With a record like that, this government almost makes Paul Flowers look competent.

I suppose, however, Erudio Student Loans have plans to improve that figure, as 14% [number of borrowers who are still repaying] of £890m falls somewhat short of the £160m paid (and that's before recovery costs are taken into account).

Did Vince Cable order a baseball bat count at Erudio Student Loans before these loans were sold on to them?

Don't forget that 40% is only of this last 17% tranche, so less than 7% of the total of these sort of loans.

Shedfan

I had a student loan 1993-5 under the original terms of The Student Loan Company which stated that any outstanding debt would be discharged (not due) for anyone over 50 when they took out the loan, on reaching age 60.

Is this selling off of old debts likely to mean the agreement terms I signed to can be overturned and now as a pensioner I may be hounded for a debt I had previously received written confirmation of being cancelled? Can the following quote taken from MSE article be trusted when debt collection firms/loan sharks get their hands on the debts?


"Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans."