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£9000 student loans system at risk of costing more than it's predecessor

http://www.bbc.co.uk/news/education-26688018

Official estimates of the cost of unpaid student loans suggest they could eventually cancel out most of the money raised by tripling tuition fees.

The government now believes that 45% of university graduates will not earn enough to repay their loans.

That is close to the 48.6% threshold at which experts calculate more money will be lost by the government than is gained from having increased fees.

of course this is based on long term extrapolation from the recent short term performance of graduates in the job market... which might be about to improve

my inner conspiracy theorist wonders if someone's trying to talk down the value of the student loanbook in preparation for selling it off on the cheap to their city buddies :unsure:

Reply 1

Puddles the Monkey

Original post by Joinedup

my inner conspiracy theorist wonders if someone's trying to talk down the value of the student loanbook in preparation for selling it off on the cheap to their city buddies :unsure:

....

Reply 2

BlueSam3

Yup. Nothing we haven't known since the universities announced how much they'd be charging. Average was well over the £7,200 break even point.

Reply 3

Joinedup

Original post by BlueSam3

Yup. Nothing we haven't known since the universities announced how much they'd be charging. Average was well over the £7,200 break even point.

I meant it'd cost the government/taxpayer more than the system it replaced, despite being intended to reduce government spending by pushing the cost onto the individual student.

it goes without saying that the nominal cost to the student went up but I guess my title could have been clearer.

Reply 4

BlueSam3

Original post by Joinedup

That's exactly what I meant. The reports drawn up whilst this was being planned said that the government would lose money if average university fees went above £7,200. In a fit of absurd optimism, they assumed that this wouldn't happen. Pretty much everybody else (dig around old posts in this forum, you'll find plenty) confidently predicted at the time that the government would lose money. That's why this is not a surprise.