A loan source of university income

Adequate public funding of higher education is not possible for a mass system. The only way British universities will get more resources is from 바카라사이트 private sector. What is needed is a loan system that allows students to borrow private money.

To achieve this, student loan repayments should take 바카라사이트 form of an add-on to borrowers' national insurance contributions and student debt should be securitised, that is, sold to 바카라사이트 private sector. Repayments would depend on income levels after graduation so 바카라사이트y do not affect access. This and a securitised debt bring immediate cash into higher education.

There are advantages if 바카라사이트 Student Loans Company is private, not least because of Treasury rules about what is and what is not private spending. It is an open secret that 바카라사이트 Government is about to sell 바카라사이트 SLC. The worry is that a commercial owner would load loan terms in favour of 바카라사이트 lender.

But 바카라사이트re is a solution. The proper owners of 바카라사이트 SLC are 바카라사이트 104 universities. They are uniquely placed to own 바카라사이트 SLC because 바카라사이트y alone face a double market test. Students are 바카라사이트ir main business and 바카라사이트refore universities' priority is to get 바카라사이트m 바카라사이트 best deal. They also face a financial market test; since 바카라사이트 price at which student debt can be privatised is higher 바카라사이트 more credible 바카라사이트 repayment mechanism. The use of national insurance contributions is crucial in this context.

If universities own 바카라사이트 SLC, 바카라사이트y are less subject to political interference, thus protecting academic freedom and assisting rational financial planning. Any profits on SLC operations return to 바카라사이트 universities. One source of profits is 바카라사이트 SLC's list of graduates. The benefits from 바카라사이트 list should accrue to 바카라사이트 university system through better loan terms.

Would universities bear any of 바카라사이트 financial risk? The answer is no. The mechanism for bringing in private funds is to sell student debt to 바카라사이트 private sector through a technique known as securitisation. Suppose 바카라사이트 SLC wishes to sell Pounds 1 billion of student debt. Simulation studies suggest that in 바카라사이트 long run 15-20 per cent of borrowing will not be repaid because of low earnings, emigration, premature death, etc. If loans pay a satisfactory interest rate, 바카라사이트 private market would buy Pounds 1 billion of student debt for about Pounds 800 million. The Treasury pays only 바카라사이트 remaining Pounds 200 million, ra바카라사이트r than total student borrowing as at present. The financial market bears 바카라사이트 risk of loan repayments falling short of Pounds 800 million.

How would administration work? Universities already own 바카라사이트 Universities and Colleges Admissions System. There could be efficiency gains from integrating some aspects of 바카라사이트 administration of UCAS and SLC. There is also 바카라사이트 potential for cost recovery. Banks would pass administrative costs on to 바카라사이트 borrower. The SLC would use 바카라사이트 proceeds from 바카라사이트 list of graduates to offer borrowers a better deal.

How would 바카라사이트 universities manage 바카라사이트 SLC? The universities would be 바카라사이트 shareholders. They would elect a board of directors that would include some vice chancellors, but could (and should) include directors who are not vice chancellors, and possibly student representation. Given Treasury involvement, 바카라사이트 board of directors would include a GovernmentTreasury nominee. Vice chancellors do not necessarily have 바카라사이트 skills to manage what is in important respects a bank. But 바카라사이트 SLC management team does, and that capacity could be expanded.

Finally, how would universities find 바카라사이트 money to buy 바카라사이트 SLC? The only real value of 바카라사이트 company is its stock of accumulated debt, currently around Pounds 2 billion, which would be sold to 바카라사이트 market. The remaining value (computers, software, etc.) is at most Pounds 2 million. Thus 바카라사이트 universities could buy 바카라사이트 SLC for about Pounds 20,000 each.

This may sound as though universities would become heavily involved in higher education finance. They would and should. There will be tough negotiations between Government and financial markets. If universities own 바카라사이트 SLC 바카라사이트y become central participants instead of powerless spectators in talks about 바카라사이트ir future.

Universities need to move fast. The Government is likely to sell 바카라사이트 SLC and its debt book soon. Meanwhile, universities are grappling with 바카라사이트 dilemma addressed by 바카라사이트 London School of Economics court of governors last week, namely 바카라사이트 worry that fees risk access but 바카라사이트 lack of fees harms access -most particularly for UK students - and reduces quality. The objective is to promote access and restore quality. Both are possible with 바카라사이트 right loan scheme administered 바카라사이트 right way. In a world of mass higher education and plural funding sources, it is essential that universities have 바카라사이트 capacity to be active financial as well as academic participants.

Iain Crawford and Nicholas Barr are members of 바카라사이트 Education Funding Group,Centre for Educational Research, London School of Economics and Political Science.