Scope of the inquiry
In December 2017, the Government sold part of its student loans book. The student loans book is money lent by Government to students to fund their studies. It is then paid back over time, depending on the income of the person who was loaned money. The value of outstanding student loans was £102 billion in March 2018; this is expected to reach £473 billion by 2049.
A recent National Audit Office report found that the Government had sold loans with a face value of £3.5 billion for £1.7 billion—roughly 48p for every £1 in value. The NAO also found that the Department for Education (which owns student loans policy) had a different way of estimating the loans’ value than HM Treasury. NAO was also concerned that HM Treasury’s key incentive for selling loans was to reduce Public Sector Net Debt—a metric that has been queried by the International Monetary Fund, the Office for Budget Responsibility, and Committees in Parliament.
It could also be difficult to establish the exact value of student loans to investors who have bought them. For example, returns to investors would increase if more student loans are paid back than the Government expects.
The Committee will hear evidence from the Department for Education, from HM Treasury, and from UK Government Investments, and may explore the objectives for the sale, how Government can be sure selling the loans is good value for money, remaining risks, and lessons learned for the sale of more loans in the future.