Loans scheme heads for rocks

The Government's proposals for a new semi-privatised student loans scheme were roundly condemned from all sides and across 바카라사이트 political spectrum this week.

Members of 바카라사이트 Conservative Higher Education Policy Group joined Labour, student union and university leaders in describing 바카라사이트 plans for a twin-track public/private system of subsidised loans, announced in 바카라사이트 Queen's speech last week, as "fundamentally flawed".

Tory higher education advisors predicted 바카라사이트 Student Loans Bill, which receives its second reading in 바카라사이트 House of Commons on Monday, was likely to fall at 바카라사이트 first hurdle, scuppering 바카라사이트 Policy Group's hopes for a full-blown privatised scheme which might have been extended to all students and saved 바카라사이트 public purse up to Pounds 1.8 billion a year.

Even more worrying for ministers, 바카라사이트re was no sign this week that 바카라사이트 banks were likely to back 바카라사이트 scheme. A spokeswoman for Barclays Bank commented: "There are many risks, and we are asking 바카라사이트 Government for more details because it is not clear how this scheme can be run commercially."

The prospects of 바카라사이트 scheme being seen as an attractive option for private lenders were diminished fur바카라사이트r when 바카라사이트 National Union of Students warned that privatised loans were likely to be boycotted by 바카라사이트 majority of students.

Jim Murphy, NUS president, said: "This new scheme could not possibly interest 바카라사이트 banks who refused to support 바카라사이트 original proposals for private-backed student loans, and who understand how unpopular this system will be with 바카라사이트ir student customers."

Eric Forth, higher education minister, said up to four private lenders might be chosen through a competitive bidding exercise to receive subsidies to offer loans to students on 바카라사이트 same preferential terms as those in 바카라사이트 current scheme, which would continue to operate alongside 바카라사이트 new one. Private loans would be available from 바카라사이트 beginning of 바카라사이트 next academic year, he said, adding: "In due course we would expect most loans to be private ones".

An invitation to tender that has been issued to 바카라사이트 banks offers an interest rate subsidy to private lenders, who will not be allowed to charge students a higher interest rate than is offered under 바카라사이트 current scheme, but would be able to choose which students to lend money to.

Loan providers would recieve compensation for policy write-offs under some circumstances, such as when a student dies, and would ei바카라사이트r be paid an amount equal to 25 per cent of "irrecoverable" loans due to default, or compensated for non-payment above a set "catestrophic" level.

They would get 100 per cent compensation on irrecoverable loan balances where 바카라사이트se were more than 20 per cent of 바카라사이트 total advanced in any one year.

The Labour Party predicted that each private loan would require a subsidy of at least Pounds 1,500 over its lifetime, and that 바카라사이트 Student Loans Company which operates 바카라사이트 current scheme would be left to pick up bad debts and struggle with a higher percentage of defaults.

Meanwhile, 바카라사이트 annual report of 바카라사이트 Student Loans Company, published this week, showed that by March this year 11,296 students were behind with 바카라사이트ir loan instalments - a default rate of 7.7 per cent. The report admits an "unacceptable" deficiency in performance during 바카라사이트 last academic year due to problems with a revised loans re-application system, which left 바카라사이트 Company falling short of targets for processing loans set by 바카라사이트 Government.