The government has today (6 February 2017) announced that the process to start selling part of the English student loan book as previously announced and subsequently confirmed in the autumn statement in November, has begun.
The sale covers a selection of loans which entered repayment between 2002 and 2006 and it is expected to be the first of a planned 4-year programme of sales of loans issued before 2012, which is expected to return £12 billion to the Exchequer.
There will be no changes to the terms and conditions of the student loans sold. Repayments will not change as a result of the sale and HMRC and the Student Loans Company will continue to provide the same service they do now. Customers do not need to take any action.
People whose loans are part of a sale would receive an official government notification in the post following the sale but nothing will change for them and no response or action will be needed.
Universities, Science, Research and Innovation Minister Jo Johnson said:
This government is committed to bringing public finances under control, and returning the budget to balance.
As part of this we will look to sell assets where value for money to the UK taxpayer is assured.
This sale will have no impact on people with student loans and will only proceed once we are satisfied that it represents value for money for the taxpayer.
Chief Secretary to the Treasury David Gauke said:
The autumn statement reaffirmed our commitment to the sale of the student loan book if market conditions were favourable and I’m pleased the timing is now right to start the process.
This sale makes sense for taxpayers and will play an important contribution in our work to repair the public finances.
The sale of the student book is a part of the government’s aim to sell publicly-owned assets in a way that secures good value for money for taxpayers and reduce fiscal pressures.
Notes to editors
- The government announced its intention to conduct a series of sales from the student loan book in November 2013. The Autumn Statement 2016 stated that subject to market conditions the government intends to launch the first sale in early 2017.
- The loans in scope of the first sale are those which became eligible for repayment between April 2002 and April 2006.
- Only English loans will be included.
- This sale would be the first of a planned 4-year programme of sales of ‘pre-2012’ English loans. Each sale in this would be subject to an assessment of market conditions and value for money before proceeding. There has been no decision by government to sell loans issued after September 2012.
- The first sale will include loans with a face value of around £4 billion, though the value to government of retaining the loans and the range of anticipated proceeds of the sale are both lower, because they reflect the government subsidy inherent in student loans and the changing value of money over time. The loans which are being sold have already been in repayment for over 10 years, and much of the original value of the loans has already been paid back to government.
- The government’s assessment of value for money for this sale includes a comparison of the value of retaining the student loan book and receiving payments over time and receiving cash now.
- Previous governments conducted sales of mortgage style loans in 1998, 1999 and 2013. These loans were taken out by students between 1990 and 1998. Unlike these previous sales the income contingent loans included in this sale will continue to be collected by HMRC and SLC.
- This sale involves securitising the remaining future repayments on the loans and selling securities representing the rights to these to a range of purchasers. The sale process is expected to take several months. The final timings and the number of loans in scope of the sale remains subject to market conditions.
- Information for borrowers is available on the Student Loans Company dedicated website.