From the FT:
The UK government is set to book a loss of around £800m from its largest privatisation of student loans, raising questions over the valuation of tens of billions of pounds of remaining graduate debt.
The controversial sale of a batch of student loans this week is expected to raise around £1.7bn, according to a Financial Times analysis of deal documentation.
The loans, which had a face value of £3.7bn last year, are part of a total of £43bn in loans made to students up to 2012, which are currently on government books valued at just under £30bn, according to the Department of Education’s latest published accounts, as of the end of March this year.
Greater minds than mine have already pointed out, if the government happy to sell on the loans for 40p in the £1* to loan sharks, why not just give ex-students the right to buy back their own debts for 40p in the £1, i.e. pay 40% of the face value in cash and have the rest written off?
An MSP (can't track down who) said that this would be a good kind of "Right to Buy".
Bonus:
Barclays is acting as sole arranger for the sale, alongside bookrunners Credit Suisse, Lloyds and JPMorgan. Rothschild is acting as an independent adviser to the government.
If ex-students buy back their own loans, these middlemen won't earn their juicy commissions.
* The number is not plucked out of thin air, the loans being sold that cheaply are ones originally made between 2002 and 2006, so it's unlikely they'll ever be fully repaid. But let's gloss over that bit.
Debate Magazine
