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This week, the government announced the immediate privatisation of £890m of student debt dating from between 1990 and 1998. The debt was sold to a consortium of private companies at under one-fifth of its value, but in reality these moves go far beyond the economically unsustainable nature of a credit-fuelled higher education system. They are part of a series of planned student debt sell-offs, and a concerted attempt to irreversibly alter how universities are funded and how this generation relates to education and work.
Since 2010, the coalition government has pursued an increasingly open policy of ending universities as a public service. Tuition fees have tripled and public money has been withdrawn – creating a multi-tiered university system competing with itself for who can attract the most lucrative students and gain the most research funding. Meanwhile, the idea of an accessible university system for all is being buried by rising living costs and cuts to student support, both to bursaries and in the scrapping of the education maintenance allowance (EMA).
Central to this new system – in which teaching grants are replaced by fees – is an escalating level of debt, far higher than what was sold this week. By 2014-15, the government will be loaning £10bn annually.
As the government has made clear, this debt is almost certain to be sold off to private companies. Debt has already played a role in deterring students from working-class backgrounds since fees were introduced and leaving significant proportions of the population with vast and unpayable burdens. The privatisation of student debt will transform this into something much worse. Because there is so much debt that a large amount will never be paid back, the only way for it to be a profitable asset is either with a state subsidy – which is what has happened in the case of Sunday's sale – or, much more likely given the scale of it, with attacks on repayment conditions for graduates, making them pay back more and sooner. This was a core part of the higher education bill 2012, which was shelved under pressure from student protests, and would be the equivalent of a massive rise in tuition fees for millions of people.
In response to criticism, the government has issued an assurance that it does not currently intend to raise the repayment rates. These reassurances are worthless: if student debt is privatised, we will be forever at the mercy of future governments. The history of higher education funding in the past two decades is littered with broken promises from every major party – from top-up fees to the Browne review.
Debt is not just an emotional or financial burden; it is a form of social control. Commercial rates of interest on student loans will mean that graduates have their lives dictated to them by a need to constantly produce. We will work harder and for longer, in the midst of a diminishing welfare state, while having our incomes siphoned off to pay for the profits of large consortiums. The effects of privatising debt will be to make education more of a commodity, and to make us more precarious and exploited.
There is already substantial resistance to these plans, with organisations such as the National Campaign Against Fees and Cuts looking to build a concerted campaign against the debt sale in the coming months. Along with the anti-austerity movement more broadly, student activism has dipped in the past year, but it is coming back to life – organising around rolling strike action in higher education and with a number of occupations, including at Birmingham, where students are defying an injunction to vacate the rooms they have been occupying. Campaigning against the attempt to privatise student debt will give us the opportunity to reach out to millions of people, and it may prove to be one of the most important battlegrounds in consolidating an opposition to the government's plans for higher education.
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