The government will be able to sell student debt on to private companies after the ‘Sale of Student Loan Bill’ received Royal Assent over the summer.

The student loan book is worth around £18.1 billion – expected to increase to £55 billion within the next ten years.

The Government say they expect the proposed sales programme to generate £6 billion in receipts by the end of 2011.

The Bill stipulates that the government will control all loan arrangements and regulations.

Crucially, private companies will not be able to change loan interest rates or repayment thresholds (the amount of money a graduate must be earning before they have to begin repaying their student loan).

But the government has been criticised for showing its hand in announcing how much it expects to make from the scheme.

There are fears that private companies might demand big concessions knowing that the government is relying on the money coming into its accounts.

With treasury coffers emptying rapidly as a result of falling VAT revenues, caused by the ‘Credit Crunch’, it is feared that if there is a lack of private sector interest in acquiring the debt, the Bill may be altered to give private companies a greater say in the setting of interest rates and payment thresholds.

The government stated: “The sale of the student loan book is part of an ongoing government initiative to transfer ownership of all public assets that are not essential to the Government’s public service delivery objectives”.

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