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

TurnUpForTheBooks_2

Dunroamin wrote: »

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

Not sure what you are trying to say, Dunroamin? Did I hear your spitoon rattle after you said "these sort of loans"? Your foray into the hyperbolic world of lies, damned lies and statistics (by stringing together a couple of fractional percentages which on their own might be interesting, but which you have then multiplied together) is a bit misleading. Surely you did not do that so you could play down the suggestion that 250,000 students still owing SLC money from the 1990s have been sold down the river to debt collectors? Are you saying that they deserved that ?

Let's first go back and look at this latest sale of a "tranche" of SLC loans. The information given is that 4 out of 10 of them are claimed (presumably by SLC) not to be adhering to Ts and Cs i.e. 40% of the loan book sold this (third) time is actually "delinquent" in terms simply of the number of individuals' loans involved. One might assume that a significant proportion of those have been delinquent for some time, so that the actual loan balances "in deliquency" within this tranche are likely to be a significantly higher proportion of the £890M total outstanding balance than the 40% might have you believe. More reason for the the rest of the 250,000 (including Shedfan above) to deserve it ?

So all those years ago, HM Government lent a lot of money to a lot of students who haven't been paying, so much so that the remainder of the book , some 20 years later, has been sold for just 19p on the pound. Note that's actually less than 20% of the face value ...

We have not been told how the £160M paid for this tranche by the debt collecting firm Erudio compares with the total outstanding balances comprised the 60% of loans which do remain in order. Nor can we guess at it, for whilst we understand that 46% are currently below the payment threshold, we are given no information about whether a significant proportion may have once been above it.

We might wonder why good loans and non-defaulters have been sold on with the bad ? Surely SLC with its official links to HMG e.g. to HMRC is best placed to continue servicing good loans and monitoring low income borrowers in case they start earning above the threshold?

Might the reason be that HMG needs cash so badly that it is prepared to expose say 200,000 (guess) not-at-fault regular payers / regular low income unfortunates like Shedfan to the rigours of having to account to a firm of debt collectors?

With the obvious similarities now emerging to that pervading with Student Debt in the US, you might forgive me if I say here that the recent news reminds me a bit like the workings of the eminent Mexican Border Agency (such as might exist). No doubt Mexico's US visa holding citizens are encouraged to believe they are safe being shepherded by their own government towards the US via the usual main roads north towards the US border.

But then they see that they have been mixed with a significant number of n'er do wells travelling without the right papers. What gives ? Money changes hands. They are all then passed into the hands of nefarious border crossing specialists who don't inhabit offices but are out riding dirt bikes most days. Our luckless good and poor citizens find they are no longer headed toward orderly crossing points run by orderly state agencies. Instead they are all being led somewhere out in the desert where they've heard strange things happen but no-one hears you cry!

Perhaps HMG hopes we can all quickly forget how the involuntary trafficking of maybe 200,000 good citizens to the books of a firm of debt collectors is a rather disgusting move, and that this may be the third time it has happened under our noses.

Don't worry Shedfan, I am sure they won't be hounding anyone ... well we hope not, don't we ?

Shedfan

To respond to Turn up for the books, and clarify my previous post, I at no time defaulted on the terms and agreements of the loans I took (3 years). For a while I repaid, but on reaching age 60 (I was a mature student) the terms under which I took the loan came into force; ie: any remaining debt would be wiped out on reaching age 60 if the loan agreement was taken out by a student over the age of 50 who remains a low wage earner. This was the case. Being of a cautious nature I wrote to the Student Loan co at age 60 to get written confirmation that I was now no longer in debt to them. I received a letter confirming I no longer had any responsibility to repay the remainder.

So, can they reverse engineer such an agreement now? The quote I added to my original post suggests not, but my dismal expectation of loan companies raises fears... Perhaps they may try? (Not without a fight. I believe I still have that letter.)

A PS. No doubt the 'defer by low wage/cancel debt completely at age 60' T&C were sufficiently attractive to mature students that it contributed to SLC's later new T& C after my time. The fact remains these were the goal posts when I took the loans and I did no more than comply with them. To reverse rules now would set a precedent. How about deciding all overdrafts must be repaid by next month, or all outstanding mortgages must all be repaid with 5 years instead of your agreed 25 years no matter what T&C you signed up to? Same principle. It would make a nonsense of contract law if reverses are allowed for student loans legally and honestly entered into.

lazer

TurnUpForTheBooks wrote: »

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.

Atidi wrote: »

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

I took this
40% are not repaying their loans in accordance with their terms
to mean that 40% of the loans are not being repaid as they have deferrred them "in accordance with their terms" (possibly have reached in the threshold in the past but have now been able to defer again etc)

I assume the 250,000 loans sold refers to the debt sold at this time.

TurnUpForTheBooks_2

It is a report based upon a press release - a typical all things to all men type confused mess - which is the probable intention of government press releases intended to make "the sheeple" forget what they read soon after they read it.

But I deduce that a not insignificant possible 200,000 "clean skins"(including Shedfan above) have been trafficked down the river with a lesser number of delinquents to a debt collector to do with what they will.

stu19

As usual it will turn out to be a scam by the govt,the company buying the loans might not change terms & conditions just now BUT how can the govt regulate them in the future.The company won't give the govt this sort of money for nothing.

Ann56

I am writing regarding the news on Monday that the Government have sold off some of the student Loan debt. This makes alarm bells ring as we have a daughter at university. Our concern is that while in the process of gradually paying off her student loan in the course of her working life that the Government may sell off her loan to a private company. The new company could then change all the rules, changing the interest rate that is charged, the conditions of the loan and even send round the debt collectors. This is very worrying to her and at a time when she should be concentrating on her studies.
Does Martin have a view on this?


I look forward to hearing your views on this matter,
My first ever post!!!!!!!!

atypical

There seems to be a lot of undue worry about this which seems to come from the word 'privatise'.

It is entirely up to government whether or not student loan T&Cs are changed. The fact the loans are being privatised actually offers more certainty that the T&Cs won't be changed as this was the condition attached to their sale (and therefore affected their value).

We can all guess how the loan book was valued, but there was a competitive bidding process overseen by PwC so it's likely what was achieved is a fair price.

Shedfan wrote: »

So, can they reverse engineer such an agreement now? The quote I added to my original post suggests not, but my dismal expectation of loan companies raises fears... Perhaps they may try? (Not without a fight. I believe I still have that letter.)

No they can't. You have nothing to worry about.

Dunroamin

Shedfan wrote: »

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."

T&Cs won't change for this tranche of loans, anymore than it did for the loans that were sold off years ago. Many people, like me, saw their loans sold off more than 10 years ago with no changes.

Dunroamin

lazer wrote: »

I took this
40% are not repaying their loans in accordance with their terms
to mean that 40% of the loans are not being repaid as they have deferrred them "in accordance with their terms" (possibly have reached in the threshold in the past but have now been able to defer again etc)

I assume the 250,000 loans sold refers to the debt sold at this time.

I do think that this is rather ambiguous but as there's 46%(?) listed as not repaying their loans because they earn under the threshold, I do believe that the 40% refers to the people who aren't repaying their loans although they should be.

Ann56

Thank you for all the helpful messages.