Universities should buy loans

THE Dearing committee will be asked to consider radical proposals to sell off the Student Loans Company to the UK's universities, it was revealed this week.

Two academics from the London School of Economics have produce a draft proposal suggesting that the 104 universities would be better able to achieve the ideal balance between commercial and student interests than any private sector owner.

Nicholas Barr and Iain Crawford, who will pass finalised details to Sir Ron Dearing, say that one advantage of the scheme would be that profits could be ploughed back into education rather than into the pockets of commercial shareholders.

Barr and Crawford suggest a scheme where the universities are shareholders in the company. They would elect a board of directors which might include some vice chancellors along with Government, National Union of Students and independent representatives.

They say that, as owners, universities would face both sides of the market. The universities would have to ensure any scheme was commercially credible, in order to secure the highest price in selling loan debt to the market, and would also have to be sensitive to students who are their long-term future.

Although the draft proposal is vague on how the universities might afford to buy the loans company, economist Dr Barr said that the SLC was unlikely to fetch a huge price and that it was possible that the Government may decide to fund the purchase in the interests of higher education generally. It said that universities might be able to raise the money through loans.

Barr and Crawford have already submitted a paper to the Dearing committee arguing for an income contingent student loans system which might include a component for tuition fees. It says that if loans were sufficiently wide-ranging then universities could operate a pricing structure which would reflect existing qualitative institutional differences and provide appropriate funding for excellence.