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Universities minister David Willetts: Student loan sell-off is 'perfectly possible'

Government apparently keen to plough ahead with plans to sell student loans in order to fund thousands of new university places

Education campaigners have condemned David Willetts after he suggested that selling off student loans to private providers was a viable way afford a planned boost in student numbers.

The sale of income-contingent student loans could bring in as much as £12 billion in five years, he said, which would be “more than enough to finance any likely increase in student numbers”.

“The new assets of each year’s graduate repayments are accumulating. It would be perfectly possible, if successive governments wished, to continue with annual programmes of sale of the graduate debt,” the universities and science minister said, according to the Times Higher Education supplement.

Willetts, who was speaking at the Study UK Annual Conference 2013, added that there had been a “misinterpretation” of the student loan book sale, denying it was “a one-off sale of the family silver".

But activists are far from convinced that the measures will benefit students. Marienna Pope-Weidemann, leading organiser of the Students Assembly against Austerity, said: “the suggestion that the sell-off of the student loan book is being carried out for the benefit of students is an insult to our intelligence. It will add a crippling financial burden to an already indebted body of graduates struggling to find secure employment and make ends meet. If anything, this exploding rate of debt will discourage poorer young people from applying to university in the future.”

“Higher education applications reached record lows this year, and caps on student numbers have nothing to do with that: students from working families are being priced out by trebling tuition fees, vanishing financial support and soaring living costs. We are seeing bigger classes, fewer resources and a smaller staff. Encouraging greater numbers to enrol while continuing to undermine our universities with these unnecessary cutbacks threatens educational standards even further,” she added. 

Hannah Webb, ones of the organisers of the National Campaign against Fees and Cuts, said Willett’s comments were “deeply irresponsible".

“This is just a quick win for the government, which is simply to trying to trick the electorate into thinking that we are heading in the right direction. The fact is that the government should be offering grants instead of loans in the first place - education is a right and should be open to everyone. Raising fees is bad enough, but then selling off those loans to private companies will further change the demographic of universities, making them seem more elitist and deter those from lower income backgrounds from applying.”

They are not the only warning signs for the Coalition’s higher education policies. In October 2013 it emerged that the number of students studying part time had fallen by 40 per cent in the past two years, cutting approximately 105,000 students out of higher education.

In November the Student Assembly against Austerity held a national day of action at 25 universities across the country, in protest of the loans sell-off.

Willetts also said the “unplanned growth” of alternative loans – which doubled between 2011-2012 and 2012-2013 - stemmed from a small number of loan providers who had since been asked to stop recruiting.

“I don’t like number controls either in alternative providers or in mainstream [education]… but the level of budgetary pressure we were facing as a result of very rapid growth in alternative providers made it very difficult for us,” he said.