Door open to privatisation of student loans

Student loans could be privatised under the bill, according to Nick Barr, economist with the London School of Economics and joint architect of radical proposals to privatise loans.

The bill gives the education secretary power to order that loans be repaid to any person or body prescribed by him. While this is likely to allow the secretary of state initially to transfer powers to the new Student Support Agency, the wide framing of Clause 16(3) would appear also to allow the future transfer of powers and responsibilities for loans to the private sector, Dr Barr said.

Sub-section 3 also allows the secretary of state to vary the rate of interest charged to student borrowers. Dr Barr said that real rates of interest would have to be charged if the government ever hoped to attract companies to student loan provision.