Government sells £860m student loans book for £160m

The government has reduced the amount of debt it owes by £160m following the sale of a student loans book with a face value of £860m.

The comparatively low sale price reflects the expected level of repayments, with the majority of loans expected to be paid back in part, or deferred.

The buyer is a consortium called Erudio Student Loans, led by investment fund manager CarVal.

The loans were taken out by about 250,000 students between 1990 and 1998.

Of the loans originally sold to students, just 14% are paying them back in-line with their loan agreements. Around 46% are not earning above the £28,775 threshold at which payments begin, and a further 40% are not repaying according to the loan terms.

Universities and science minister David Willetts said the sale represented “good value for money, helping to reduce public sector net debt by £160m”.

He added: “The private sector is well placed to maximise returns from the book which has a deteriorating value. The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans.”

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