MSE News: Government gives student loan sale 'assurances' after Martin raises concern

Legacy_user

The Government has promised the upcoming sale of student loan debt will not impact graduates in any way...

Read the full story:
'Government gives student loan sale 'assurances' after Martin raises concerns'

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

VT82

What I don't get is why the Government would sell the assets?

They are already accounting for them at a book value, below their face value, because they know a lot of it won't be repaid. But the new purchaser won't be prepared to pay above the book value, because there's no way they could make operating efficiencies relative to the existing processes to make it worth their while. So the Government can't really profit from the sale?

The only other reason would be if the government needed a lump sum instead of a long term income from the loans, but as they can borrow at will, and cheaper than any private company could, this reason doesn't stand up either.

The only alternative left would be if they found someone willing to pay more than the book value the Government is holding it at, which would only make sense if the new buyer has a way of recovering more payments than the Government thinks it can, which is why I guess Martin is concerned about it...

Kim_13

Didn't a previous article say that a sale could be an advantage as terms couldn't change after a sale? Or does this not apply where the SLC continue to be the point of contact?

Ed-1

Kim_13 wrote: »

Didn't a previous article say that a sale could be an advantage as terms couldn't change after a sale? Or does this not apply where the SLC continue to be the point of contact?

Question 2a:

http://www.parliament.uk/documents/lords-committees/economic-affairs/Student_loans/20161207%20Jo%20Johnson%20to%20Chairman%20-%20Student%20loans.pdf

michaels

Two ideas for MSE editorial:
1) Is it worth paying off a student loan early? How about if you have to borrow to do so?
2) Whenever personal debt is sold on shouldn't the borrower have first right of refusal to purchase their own debt at the agreed sale price?

agrinnall

michaels wrote: »

Two ideas for MSE editorial:
1) Is it worth paying off a student loan early? How about if you have to borrow to do so?
2) Whenever personal debt is sold on shouldn't the borrower have first right of refusal to purchase their own debt at the agreed sale price?

1) Already done, see the link at the top of the page.
2) Interesting idea, although unlikely to be feasible for more than a small proportion of the affected population where student loans are concerned.