LAST Monday the coalition government’s drive to privatise every single public service and completely smash up the welfare state took yet another grotesque turn with the selling off of £890m of student debt to a private debt collection agency, Erudio, for the paltry sum of £160 million.
When he first announced this intention back in March, the Tory universities minister, David Willetts, said that this would ‘allow us to reduce public debt and maximise the value of one of the government’s assets’.
He added: ‘The private sector’s expertise makes it well placed to collect this debt, and the sale will also help the Student Loans Company to concentrate on providing loans to current students.’
So, by privatising student debt, Willetts has, at a stroke, wiped off £160 million from the national debt, an amount that is absolutely minuscule when you consider that the actual national debt is reckoned to be increasing by £2.3 billion every week.
In return for this, Willetts has thrown hundreds of thousands of students onto the tender mercies of private debt collectors with their ‘expertise’ at screwing money out of people.
The debt that has been sold off this week relates to students who received student loans to maintain themselves at colleges and universities from 1990 to 1998 after the ending of student grants but before the introduction of tuition fees.
Even without the burden of tuition fees, introduced in 1998 and now running at £9,000 a year, these students ran up huge debts, some in excess of £30,000.
At present, repayments on these loans can be deferred if the borrower’s income falls below 85% of the national average wage.
Out of the 250,000 loans sold off this week, only 14% are making repayment, 46% are earning less than the repayment threshold, and 40% the student loan company have no idea where they are; undoubtedly, the vast majority are simply unemployed and unable to make any repayments.
The real anticipation by the private debt collectors is the prospect that the entire student loans business will be handed over to the private sector.
The groundwork for this was laid this week by the National Audit Office which reported that the government was not doing enough to get student loans repaid and that outstanding student debt, currently £46 billion, would rise to £200 billion in the next 30 years with over 50% of students not expected to earn enough to repay.
The privatisation of student debt is not about merely raising money for the government, it is about smashing up the whole concept of free education, of turning the clock back to the days before the creation of the welfare state when higher education was a privilege for the wealthy who could afford to pay sky-high tuition fees and support their offspring through years of university study.
For the ruling class today there is no point in educating the sons and daughters of the working class: after all, under capitalism there are no jobs for them after they graduate.
Students have risen up against this all-out assault on free education.
In Birmingham, students defied a High Court injunction and carried on with an occupation of the university’s building, risking arrest in defence of the right of young people to a free education system and not to see it destroyed in order to pay back the debts of the banks. They have now been removed by bailiffs, but they have announced that they will be taking strike action alongside lecturers and other uni staff next Tuesday.
In the University of Sussex, students have resumed their occupation against privatisation of university services. They too will be taking strike action next Tuesday.
Students and university staff must not be allowed to fight alone. The right to free education was a right won by the whole working class and it must be defended by the mobilisation of the entire working class in a general strike to bring down the government and bring in a workers government and socialism.
Amongst its first actions will be the abolition of student debt, the abolition of tuition fees, and the restoration of student grants. Free state education is the basis of a civilised society. It is the complete opposite of the Boris Johnson nightmare – a society based on greed.