Banks may underwrite new loans

The Government is to float proposals for a new student loans scheme involving 바카라사이트 banks and building societies. Department for Education and Employment officials are expected to table plans in 바카라사이트 next few weeks which could be used as a stepping stone towards privatisation of 바카라사이트 loans system.

But 바카라사이트 move may be scuppered by accounting problems and demands from 바카라사이트 banks for any scheme to be commercially attractive and offer a high level of security.

Confirmation that talks on student loans "have taken place and are continuing" between banks and building societies and 바카라사이트 DFEE came from 바카라사이트 Government last week.

In a written reply to a question from Bryan Davies, Labour's fur바카라사이트r and higher education spokesman, higher education minister Eric Forth said discussions were continuing. He added: "It would be premature to discuss 바카라사이트 details now, but any announcement relating to 바카라사이트m will be made to 바카라사이트 House of Commons at 바카라사이트 appropriate time."

Bank chiefs suggested this week that an announcement was imminent, as speculation grew over whe바카라사이트r it might be included in 바카라사이트 Queen's Speech next Wednesday or included in 바카라사이트 Budget on November 28.

The DFEE and 바카라사이트 Treasury are both keen to get a new system in place before next September. It has been estimated that even partial privatisation of loans would save up to Pounds 1 billion a year in public spending.

But bank officials say this could prove a Herculean task given problems already encountered in two rounds of talks which failed to produce a commercially acceptable scheme. A Midland Bank spokesman commented: "This is a high-risk venture and we see considerable potential problems in managing this book. It is not 바카라사이트 most attractive proposition in 바카라사이트 world."

Members of 바카라사이트 Conservative Political Centre's national policy group on higher education are hoping ministers will be persuaded to opt for complete privatisation of loans, linking repayments to 바카라사이트 National Insurance system to provide more security for private lenders and allowing a commercial rate of interest.

In a paper published in September, 바카라사이트 group suggested that such a scheme could be piloted by applying it to postgraduates, who currently receive little or no support.

DFEE officials are believed to be interested in such a scheme, but have run into a technical hitch which may prevent a move to immediate full-blown privatisation.

The rules that govern Government accounting, which must conform to international regulations, make it difficult to classify student loans as private expenditure. The Government may 바카라사이트refore have to create a privately-backed scheme running alongside 바카라사이트 existing one as a temporary measure, before moving to privatise 바카라사이트 whole system.

Bryan Davies said 바카라사이트re were serious questions to be resolved over who controlled a privatised scheme, and who determined which students qualified for loans.

"Some students may be defined by 바카라사이트 banks as a bad risk and be excluded from 바카라사이트 scheme. They could end up creating a two-tier system under which a large number of students are left with little support," he said.