Letters from Willetts – student loans

Via my MP, I have in the last fortnight received two letters from David WIlletts replying to my concerns about the proposals for Higher Education in England.

The first, dated from mid-April, confirms what I have already written on here. 

The government will not legislate on the ‘details’ of the proposed student finance scheme: the interest rates (linked to RPI) and the repayment threshold (indexed to wage inflation). 

According to Willetts, “Parliament will still have the opportunity to scrutinize the Regulations and to oppose them if it feels that the Secretary of State is using his powers unreasonably.” 

But as an administrative matter, rather than a regulatory one, this current ‘intention’ lacks substantial protection and can be more easily revised in future.  That means that, in a possible parliament where the Conservatives have an outright majority, it will be much easier to lift the concessions granted to the Liberal Democrats in December and move towards commercial interest rates.  The 2011 Education Bill, which contains clauses to allow commercial rates on student loans, is now in the House of Lords with its second reading there to take place next week (14 June 2011).

This letter goes on to assure me that ‘a range of potential options for monetizing the student loan book is being looked at’.  Since the government can already sell-off the loan book to third parties without the need to consult with those who have taken out a loan, what could these further options be?  Well, the book as a whole may not be too attractive, but certain companies may be interested in taking on the loans given out to those who study at particular universities.  Oxbridge and Russell Group loans, for example.