Published on October 22, 2013 | by Laure Fourquet0
Students protest over loan privatisation plan
UAL students have taken part in protests over the privatisation of student debt, including demonstrations at the offices of Liberal Democrat MPs over their support for the plan.
The government has put forward proposals to sell off the pre-2012 student loans to private buyers in order to boost investment and reduce public debt.
Ministers say the sell-off is not going to change any of the terms of the contract students have signed.
However, opponents of the plan say there is no legal guarantee that it won’t happen, and that private companies will end up raising the interest rates.
Howard Litter, Goldsmiths’ campaign officer told ALN: “There is pretty much a litany of things that could go wrong.”
Investment bank Rothschild suggested making the debt more attractive to potential investors by removing the cap on interest – that would increase their returns but many former students would have to work longer to repay their loans.
The Rothschild report also recommends a guarantee that UK taxpayers underwrite a higher interest rate so the private sector would acquire all value of loans but none of the risk.
Financial experts such as Martin Wolf from the Financial Times have criticised this suggestion, branding it “economically illiterate”.
“You need a student loan to study, unless you are really rich. It is a shame because education is a right not a privilege.”
John McDonnell, Labour MP for Hayes and Harlington, has also raised concerns: “I do not trust the word of government in giving assurances that the terms and conditions of loans won’t change.“
A first year graphic and media student at LCC who did not wish to be named, said: “It is kind of a Catch 22 for students because you need a student loan to study, unless you are really rich. It is a shame because education is a right not a privilege.”
The plan was announced in June 2013 by Danny Alexander, the Chief Secretary to the Treasury and has led to a backlash from student organisations including the National Campaign Against Fees and Cuts (NCAFC) who organised a set of protests across London.
The NCAFC says it successfully occupied the office of Lib Dem MP John Hemming and targeted the constituency office of Business Secretary Vince Cable. UAL and Goldsmiths students protested at MP Simon Hughes’ constituency office.
Students at the protest expressed their anger: “It is a breach of the rights we have,” said Pooja Ahmuwalia, 21, a Goldsmiths student. “When we signed the contract we agreed to something different and if they are going to add new interest to our loans that is going to put us further into debt. That is not investing into our future, that’s actually making it worse.”
Summer Oxley, Wimbledon student, said it would be even worse for arts students: “I am probably not going to be able to afford to pay my loan back, it is a ridiculous risk. I don’t think they realise that it is someone’s entire life that they are selling off.”
Students say the recent tripling of undergraduate tuition fees to £9,000 will lead to them owing a huge debt at the beginning of their working lives.
The proposal to sell off student loans is not expected to be finalised until 2015 but in the meantime, more protests are being planned.