The student loan book is being privatised. We shouldn't be naive about the implications.

Plans to privatise student the student loan book threaten to become a de facto retrospective fee hike. Recent graduates are already chained by debt; we must fight these dangerous plans.

Michael Chessum
21 October 2013

Students across the country protested at the offices of Lib Dem MPs/NCAFC

The generation emerging from school and university lives in an era of unending debt. The act of taking on almost unfathomable quantities of personal debt is now assumed and almost compulsory – in order to attend university, and often in order to pay the rent or feed a family.

The fleeting outrage of some elements in mainstream politics against payday lenders may be welcome, but it is an easy gesture at the tip of a very large iceberg, one which is driven by the very same market orthodoxy that almost everyone in the corridors of power now either passively accepts or actively promotes. Credit is the answer to a society in which the state is no longer willing to tax wealth to pay for basic public services, and in which the gap between the cost of living and real term earnings has consistently risen since the 1970s.

The education policies of successive governments – and, most recently, the tripling of home undergraduate tuition fees to £9,000 – will put millions into the position of automatically owing huge debts at the beginning of their working lives, for many in excess of £50,000. Studies have consistently shown that tuition fees and debt aversion have pushed working class students away from study. For those who do choose to go to university, the only thing that makes debt on this scale remotely palatable is the knowledge that it is relatively good debt to owe: it is a graduate contribution, and its interest rates are stable.

Now even this is under threat. On top of the tripling of fees, the scrapping of Education Maintenance Allowance and the marketising reforms of the higher education white paper of 2011, the government has announced that all student debt between 1998 and 2012 is to be packaged up and sold off to private companies from 2015. Student debt is terrible debt to own, as there is so much of it that a large proportion will never be repaid, so in order to make the sale worthwhile for private companies, the government will either have to use a ‘synthetic hedge’ – effectively a subsidy for shareholders – or attack the repayment conditions for graduates, by making us pay back more and sooner. If the latter were to be deployed, it would be the equivalent of a large and retroactive hike in tuition fees for all students since 1998.

In response, David Willetts wrote to the National Union of Students in September to issue reassurances that no rises in repayment rates were to be expected. These assurances are, in the medium term, meaningless: the past 15 years has been the story of governments moving half-way towards an unthinkably unpopular and regressive policy, waiting two years, and then implementing it in full. In 2001, having introduced fees in its first term, the Labour Party was elected on a manifesto stating that it would “not introduce top-up fees and has legislated against them"; in 2004, it introduced variable top-up fees.

Before the Higher Education Bill was shelved under mounting pressure from student groups and academics in 2012, it contained a clear intention to abolish the protections for student loan repayment rates. Just as £1,000 in 1999 became £3,000 in 2005 and £9,000 in 2012, if this sell-off goes through, we are likely to be faced with attacks on repayment conditions at some stage.

Somewhat absurdly, NUS has claimed a ‘win’ on this and is barely mentioning it, let alone mobilising. Quite apart from the obvious incentive for private companies to charge higher rates of interest on pre-2012 cohorts, and the government’s clear willingness to facilitate them in doing so, there are not even paper assurances for students after 2012.

The only power that we have in this context is the power of organisation and clear, principled objectives. That is why the National Campaign Against Fees and Cuts – the organisation which emerged from 2010, and one of Britain’s only major national student organisations that still believes in free education – has launched a campaign to fight the policy. On Friday, we began by targeting the offices of high-profile Liberal Democrats, as part of an initial strategy to weaken support within government, and snuff out the policy before it gets oxygen. In the coming months we will be looking to escalate actions and build a coalition against the sell-off capable of mobilising on a national scale.


Students blockaded Vince Cable's office with 'a tour of debt' on Friday/NCAFC

It is a sad indicator of the defeats of the student movement that we must now fight tooth and nail for such a meagre concession, but even recent history shows us that the government can and will back down under pressure, as it did with the Higher Education Bill in 2012.

Education is a pivotal battleground for the future of society because it is where we are moulded, but also because here, the effects of marketisation are reflexive. Every time fees are raised, it is not just a defeat: it also alters and consumerises the consciousness of students and stunts the reproduction of dissent itself.

Equally, the purpose of debt and interest is ideological as well as financial. It binds us to a progressively atomised existence, in which we are driven not only by the will to consume, but, more importantly in times of austerity and precarity, by the threat of default, committing us to work harder and for longer, with increasingly few alternative employment prospects and a vanishing welfare state. Personal debt and interest are forms of social control, and unless we mobilise to stop them, the government may be about to inflict this reality onto millions of young people.

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