Student debt problems bought into focus by the budget
As posted previously, the budget has bought little good news for anyone and the majority of people are going to need to tighten their belts to avoid getting into debt problems in the future. Amongst the headline grabbing moves such as raising VAT there are a number of other measures which have an impact on sections of society.
One of these is the future sale of the student debt book. At present the interest on student loans is subsidised by the government, costing up to £16 billion per year. The sale of this debt book could well mean an increase in student loan repayments, leaving students even further in debt.
Currently students taking a loan from the official provider, The Student Loans Company, do not have to make repayments until they are in full time work. At this point repayments are deducted at source until the full loan amount, plus interest, has been paid.
The Student Loans Company lent over £5 billion last year, and could be attractive to a number of financial institutions. However the timing of the sale has been questioned as it may not achieve the price it could in today’s depressed market conditions.