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Taking out a supposedly state-funded student loan is a dangerous undertaking, because ‘public’ can easily become ‘private’. The UK government has announced that it had sold off a GBP 900 million (EUR 1 080 million) worth student loan debt to the debt collection company Erudio Student Loans. The private debt management consortium acquired the student loan debt for GBP 160 million (EUR 192 million) as the highest bidder. Erudio Student Loans will now be in charge of collecting the outstanding debt amount of students who began their courses between 1990 and 1998.
The UK government justifies this step by means of a decrease of public debt. Although the 1990-1998 student loan debt has been now transferred to the private sector, the terms and conditions for borrowers are not supposed to change, as the government had refused to allow an increase of the interest rate. Previously, the UK had sold off two student loan debts in 1998 and 1999. The third privatisation of a government-backed student loan had spurred controversy among students who fear a privatisation of their current student loan debt in the future. The announcement add to growing distrust in the UK’s higher education policy, as British media has reported a budget shortfall in the Department for Business, Innovation and Skills (BIS) which would be likely to lead to a future cut in grants.