The mortgage-style loans, which were taken out by students who began courses between 1990 and 1998, have been sold to a debt management consortium for 160 million. Universities Minister David Willetts said the private sector was best placed to collect the outstanding debt Credit: PA Wire Universities Minister David Willetts said the move represents “good value for money”, and would enable the Student Loans Company to concentrate on administering more recent loans. NUS president Toni Pearce said it was “extremely concerning” that the public would be subsidising a private company to make a profit from public debt. More top news
Universities Minister David Willetts said the private sector was best placed to collect the outstanding debt, allowing the Student Loans Company (SLC) to concentrate on administering newer loans. Of the 250,000 loans sold, around 46% are earning below the repayment threshold, 14% of borrowers see here are still repaying and 40% are not repaying their loans in accordance with their terms. The project to find a buyer for the remaining mortgage-style loans was launched earlier this year, when Mr Willetts said the plan would “maximise the value of one of the Government’s assets”. The mortgage-style loans have a face value of around 890 million but the market value is significantly lower. The SLC will continue to manage the loan book until it is transferred to Erudio Student Loans in a few months’ time.
I’m not surprised the balance has grown. Simply hanging loans in deferment causes the balances to grow and missing payments kicks in late fees and penalties. If these are truly just private student loans then there are limited options outside of what the servicer will offer. Your other options are to find andtalk to a local bankruptcy attorney about filing bankruptcy that may reduce or eliminate the loans, or default on the loans and hope the statute of limitations expires before they sue you and then discharge them in bankruptcy. Despite what you might hear, some private student loans can still be eliminated in bankruptcy.
They say there is actually little to no profit. In his call with reporters this summer, Duncan did not get into which method of accounting he prefers, just that he believes the government isn’t running the student loan system in order to make money, but rather to help students afford college. Debt’s effect on economy Prospective students tour Georgetown University’s campus in Washington, D.C., in July. (Photo: File photo by Jacquelyn Martin, AP) The large debt numbers have sparked concerns about impact that debt is having on the nation’s economy. “(It) is a burden which is affecting, for example, the ability of many young people to buy a first home, affecting other purchasing decisions they might make, affecting obviously their overall financial condition,” Federal Reserve Chairman Ben Bernanke said at a conference earlier this month.
The disposal, to a debt recovery specialist, will be for a fraction of the debts’ face value, and encompasses mortgage-style loans that are the last of their kind still in public ownership. The sale, which does not include Income Contingent Repayment loans like the ones currently offered, comes as student groups step up their protest over the disposal of the loan portfolios. The coalition is drawing up plans to sell the entire outstanding student loan-book, which has a face value of roughly 40bn. Investment bankers from Barclays and Rothschild were appointed by the Department for Business, Innovation and Skills (BIS) last month to oversee the sale, which more than 15,000 people have signed an online petition to oppose. Danny Alexander, the chief secretary to the Treasury, said during the summer that the Government hoped to raise 10bn from the sale of corporate and financial assets such as the student loan book by 2020.
With education-focused interest groups and policy experts set to debate key aspects in the coming months, Chopra urged financial regulators and bankers to make their views on student debt known if they wish to deal with what he described as a repayment problem, among other issues. With some 40 million borrowers owing an average of $30,000 in student debt, according to Chopra, the stakes are high. It would be irresponsible for financial regulators and economic policymakers to ignore the existing trillion, Chopra said, in reference to unpaid student loan bills. We must resist the temptation to address these concerns solely through an education policy lens, when, in fact, they may require very significant attention from financial regulators and the financial services industry, Chopra added. The impending reauthorization of the Higher Education Act may present an opportunity for creating a better functioning student loan market. Chopra’s recommendations suggest that financial regulators, led by the CFPB, may seek greater influence over the reauthorization of the Higher Education Act. The Education Department, according to congressional aides and borrower advocates, usually dictates the debate.