When it comes to privatisation, the coalition government are not stopping at the NHS or the Post Office and Royal Mail; the government has started the process of passing higher education fees into private hands as they announced the selloff of nearly 1 billion pounds worth of student debt. By Ollie Hicks.
Danny Alexander, the Chief Secretary to the Treasury has confirmed that the government will be selling public assets such as the student loan book as part of its plan to raise £15bn from sales of public assets in order to boost investment, with £10 billion of this number coming from corporate and financial assets. The sale is not expected to be finalised until 2015, however, this has caused mass student protests in London city centre as they are not in favour of the potential problems that privatisation of their loans will cause for them in the future. The protests of mid-December, on the national day of action, resulted in the arrests of 41 protesters, who do not show signs of stopping anytime soon.
There are a number of different reasons as to why the Government is privatising student loans, many of which are not taking into consideration the impact upon students after they graduate. Privatising students’ fees will not only move responsibility from the hands of the Government to private companies, private companies will also want to make a profit on these loans as they would with any asset; the government will have to pass legislation that will allow private companies to attack repayment rates which could mean paying back more overall and paying it back sooner and even bringing the cap on earnings down so graduates start paying back when they are earning less – essentially meaning a massive hike in tuition fees. It is argued that graduates will potentially be subject to commercial rates of interests, outlined in the higher education bill proposed before Parliament in 2012. The Government specifically included a measure which took student debt out of the hands of parliament and transferred it into the hands of private companies, allowing these private companies to have control over interest rates in order to make it more manageable for them to take on this debt. Once this debt is passed to the hands of private companies it is almost irreversible and the only way to make any money back from it is through the tax payer funding it or more likely, raising the interest rates. This will have a detrimental effect on graduates, one of which is by forcing people to take on commercial rates of interest; the government will be indirectly forcing people to work harder and for longer in order to pay greater interest, thus increasing the profits of large consortiums.
The debt itself is not only an emotional and financial burden to graduates, from the Government’s perspective it can be a form of social control. The private companies are not necessarily acting alone; forcing people to take on this amount of debt changes the way students perceive higher education itself, and makes higher education a public service only accessible to those who want to go there and to those who can afford it.