Government’s £800 million loss proves that no one wins when it comes to student debt

The government have lost £800 million on a deal to privatise student loan debt. Looks like everyone's out of pocket because of student loans.

Government's £800 million loss proves that no one wins when it comes to student debt

by Ebere Nweze |
Updated on

Tuition fees in the UK have a checkered past — so checkered in fact, there’s a Wikipedia article dedicated to just the history of tuition fee increases with a whopping 33 subsections.

It all began in 1997. Tony Blair's 'New Labour' manifesto convinced millions that the party would generate growth in a country ravaged by recession — but that there would be a few conditions. One of them was the 'possibility' of tuition fees reappearing. (A generous grant scheme brought in by the Education Act of 1962 meant that the cost of university for full-time students was virtually zero.) Voters thought it was worth the gamble.

Labour, of course, would carry the day. The party confirmed that from September 1998, students would shoulder some of the financial burden for their studies. Fees were capped at £1,000 at the time, but now they're at an uncomfortable £9,250 a year, with approximately 76% of all institutions charging the full amount in 2015-16, according to the Universities and Colleges Admissions Service, more commonly known as UCAS. Constant increases have caused stress and financial difficulties for many British students. Many have felt obliged to skip university altogether, potentially missing out on opportunities owing to government policies.

So when we found out that the same government recently made an £800 million loss in an attempt to sell off some of our student debt to a host of private interests, the likes of which including Barclays, Credit Suisse and Lloyds, we had to smirk a little. Experts expected the sale to make £12bn for the exchequer but brokers of the deal recovered just £1.7 billion in the negotiation. Now the government knows what it's like to be broke.

Except whether we like our government or not, their blunders affect us all. Officials originally intended for the sale to put money back into the public purse but this week's loss has hindered progress. Worse still, those loans will still be privatised, a prospect that comes with certain disadvantages, according to the Independent.

Regardless of the misstep, we think the main priority is to give students as many options as possible to pay off their debt without financial hardship. (A complete overhaul of tuition fees would be great, but more grants and less interest would equally suffice.) That said, it's probably best that they sort out Brexit first. From the looks of things, the government needs all the time and help it can get.

**Follow Ebere on Twitter @NwezeEbere

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This article originally appeared on The Debrief.

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