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Interview: Dr Thomas Richard Bowers - 'Stop Selling Student Loans' e-petition creator

10th July 2013
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Following on from our coverage of ‘Stop Selling Student Loans’ Dr Thomas Richard Bowers, creator of the ‘Stop the Sale of Student Loans’ e-petition discusses in an interview with The National Student, why he felt the need to petition against selling student loans.

Loans e-petitionNow with 7,181 signatures, Dr Bowers is determined to reach his target of 10,000 and to gain an official response from the government.

 

What do you think motivated the Government to consider selling student loans? 

The current Government set itself a near impossible target of balancing the UK's books by the end of its first term in power via a huge austerity drive and cuts to the public sector, and has doggedly pursued this course despite the advice of the IMF. In order to help achieve their goal, they are looking at selling off publicly-owned financial and property assets, such as the student loan book, as part of a package worth about £15 billion.

You mentioned about a ‘short-term gain’ on the e-petition, could you be more specific about this?

If the Government does sell off the student loan book, they will make a one-off profit from it in the form of a lump sum and also take the outstanding loans off the public debt. This helps in their short-term goal of "cutting the deficit." However, the loan book as it stands is not a very attractive prospect to investors. Interest rates are currently capped at either the Bank of England Base Rate +1% or Retail Price Index (RPI), whichever is currently lowest.

At the moment, this is 1.5% (Base rate +1%). This means that government may very well have to offer a "sweetener" to private investors, which may take the form of either a removal of the cap on interest rates, or basically compensating them with treasury funds if the loans do not return the expected profits.

What are your concerns if the cap was removed from student loans? 

My principal concern, and that of many graduates, is that removing a cap on loan rates is going to mean that we will be paying off our student loans for longer. However, if loans were privatised, there is no guarantee that the profits would be invested back into the UK's economy. In the long-term the concern is that our student loan system may start to resemble that in the United States, where the interest rate on student loans has risen this year to 6.8% and many graduates struggle to even pay back the interest on their student debt.  

Could you explain more about why you are against selling student loans/why you felt the need to start an e-petition?

 I graduated from medical school in 2007 after 7 years at university in total. In a way I'm somewhat fortunate, as although I've accrued a fair amount of student debt, in the time since I started and graduated from university, we've seen the introduction of top-up fees and then full fees for courses being charged. The amount of debt a student on a three-year bachelors degree course now will acquire probably exceeds my entire undergraduate medical degree.

It is likely that if the Government bring in the changes to interest rates and sell off the student loan book, that many graduates in the UK will never be able to repay the costs of their education. I feel strongly that there should not be a financial barrier to higher education in the UK and that, in addition, existing graduates should not have sweeping changes to contracts they took out several years ago being made without their knowledge or consent. 

Under the 2008 Sale of Student Loans Act, the Government can authorise the sale of loans without consultation or a parliamentary vote. The proposal itself was hidden away in Danny Alexander's speech and there has been little to no press given to an issue that directly affects a significant proportion of the UK's population. By starting the petition I hoped to bring some light to the issue and make people aware that these kind of sweeping changes are being made to their circumstances without their knowledge.  

How many signatures do you hope to collect? 

I am hoping to get as many signatures as possible, however my target is at least 10,000. At that point the government is mandated to give an official response. If the petition were to reach 100,000 then there is a requirement for it to be debated in parliament. The proposed sale is not due to take place until 2015, but consultation has taken place on this issue as early as 2011.

Sign the petition here: http://epetitions.direct.gov.uk/petitions/52145

 




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