Headlines from the BIS accounts
The 2015/16 annual accounts for now-defunct BIS were published back in July. They covered the financial year to 31 March 2016 (which can cause some confusion when comparing with other figures, such as SLC, that operate on the academic year).
Figures inside represent the first official updates to student loan estimates, valuations and projections since the Autumn, when the government confirmed it would freeze the loan repayment threshold for five years and lower the official financial reporting discount rate for loans to RPI plus 0.7% from ‘plus 2.2%’.
These measures were designed to secure the ‘sustainability’ of the student loan scheme and when combined they boosted the fair or carrying value of the student loan book by over £8bn.
At the end of March 2015, existing student loans had a face value of £64bn (what was nominally owed to government) and were expected to generate repayments equivalent to £42bn (‘fair’ or ‘carrying’ value) in net present value terms.
By the end of March 2016, the face value of the book had increased to £76bn with a fair value of £57bn, an increase for the latter of £15bn on the back of only £12bn issued in new loans. (FE Advanced Learner Loans account for £160m of the year’s new issuance).
The accounts report that the official RAB estimate for new loans issued is 23% (down from over 40%) and that the Treasury has set a target RAB of 28% (down from 35% to reflect the rebasing that the discount rate change has produced.
In a separate email, the BIS press office confirmed to me that the RAB allocations given to BIS in the 2015 Autumn Statement have been replaced by the following, which will pass over to DfE.
2016-17 2017-18 2018-19 2019-20
3.4 3.8 4.2 4.5