Anthea Lipsett
Wednesday April 9, 2008
Student loans of £800m to cover tuition fees and maintenance costs were partly responsible for the jump in unsecured loans shown by the Bank of England last week.
According to the Financial Times, unsecured lending to households spiked unexpectedly in February - by £2.4bn - because of the increased volume of students taking loans.
The Student Loans Company (SLC) said it is now paying for two cohorts of students - first and second years - amounting to nearly £800m in loans this year.
Other housing market indicators such as home loan approvals and lending figures and a recent survey by Halifax have also pointed to a cooling housing market as four interest rate rises have made it dearer to move up or get onto the property ladder.
It has paid student loans to cover tuition fees directly to universities since fees were introduced in 2006. The first payment went out in February 2007.
A spokesman said the amount was just short of £800m on February 6. Two payments are made to universities each year. The next is due on May 2. "We will see a similar rise in unsecured lending on that date for the same reason," he said.
The two cohorts are now getting the loans and the amount will rise again next year by a third after which it will plateau.
"That will be it because you start the natural process of rotation where everyone is doing three year degrees," the spokesman said. "We will climb to a plateau next year is the expectation."
He said the SLC was "almost certainly" getting the maximum numbers of eligible students - in the order of one million people - taking up their offer of tuition fee loans. Each receives around £2,000 a year to pay towards maximum tuition fees of £3,070.
The government is still trying to get parliament's approval to sell off the £18.1bn debt owing to it - which is expected to rise to £55bn over the next 10 years - to the private sector.
The Commons has approved the move but it is still going through the Lords. If passed, the bill would give the government the authority to sell off loans when the market is ready.
Source:
http://education.guardian.co.uk/students/finance/story/
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