Government Sells £900 Million In Student Loans To Debt Collection Company

It measures the cash outflow as the disbursement of the principal loan amount and the inflowing money as the payments of interest and principal, minus amounts not paid, plus any fees the government receives from the borrower. But there are those who say this is a bad way to measure and predict what loans cost the government. They like something called “fair This summer, Congress directed the Government Accountability Office to conduct a study on the true cost of the federal student loan programs.value accounting,” which they say does a better job of factoring in the cost of collecting delinquent or defaulted loans and looking at the risk taken by the government when it lends out money. They say there is actually little to no profit. In his call with reporters this summer, Duncan did not get into which method of accounting he prefers, just that he believes the government isn’t running the student loan system in order to make money, but rather to help students afford college. The large debt numbers have sparked concerns about impact that debt is having on the nation’s economy.
Source: http://www.wltx.com/rss/article/256951/142/Govt-Shows-413-Billion-in-Student-Loan-Profits

Of the 250,000 loans sold, around 46% are earning below the repayment threshold, 14% of borrowers are still repaying and 40% are not repaying their loans in accordance with their terms. The project to find a buyer for the remaining mortgage-style loans was launched earlier this year, when Mr Willetts said the plan would “maximise the value of one of the Government’s assets”. The mortgage-style loans have a face value of around 890 million but the market value is significantly lower. The SLC will continue to manage the loan book until it is visit the website transferred to Erudio Student Loans in a few months’ time. Erudio is backed by a consortium led by CarVal Investors and Arrow Global, a consumer debt management firm. There will be no change to borrowers’ terms and conditions, including the calculation of interest rates for loans.
Source: http://home.bt.com/news/uknews/student-loans-sold-to-debt-company-11363852659506

College graduates struggle with student loan spiral

is an anomaly in Europe, though, says Holly Oberle, a Colorado native who is enrolled at the Berlin Graduate School for Transnational Studies. “It is quite unfathomable for most Europeans that you would start your adult life tens of thousands of dollars in debt,” says Oberle, who researched higher education systems in countries such as the U.K., Hungary, Argentina and Turkmenistan for her book “College Abroad.” “People always seem stunned that the American system even sustains itself under the current conditions,” she says. While American student loan debt shows no signs of slowing down, some lawmakers are attempting to streamline the repayment process by taking a page from the U.K. [Read up on student loan repayment options in the U.S. ] Monthly student loan payments in the U.K. are automatically deducted via a payroll withholding, similar to taxes or social security in the U.S.
Source: http://www.huffingtonpost.com/2013/11/20/student-loan-debt-around-the-world_n_4299782.html

Student loans worth nearly £900m sold off

We will never pass on your details to anyone else. I would like to receive additional offers and information from The Independent I would like to receive additional offers and information sent by The Independent on behalf of carefully selected partners Terms and Conditions * I have read, understood and agree to be bound by the terms and conditions of Independent Digital News and Media Limited Registration Government sells 900 million in student loans to debt collection company Sale made as part of an effort to improve the nation’s finances Simon Read Simon Read Simon Read is Personal Finance Editor at The Independent. He edits the Saturday Your Money section as well as writing for the news and business pages of the Independent and i newspaper. Your friend’s email address Your email address Note: We do not store your email address(es) but your IP address will be logged to prevent abuse of this feature. Please read our Legal Terms & Policies Email Some 300,000 former students could soon face a barrage of fresh debt demands after the Government announced it was flogging student loans worth 890m to a private company, renowned for its persistent debt recovery practices. Erudio Student Loans has agreed to pay 160m for the loans, taken out by students between 1990 and 1998.
Source: http://www.independent.co.uk/student/news/government-sells-900-million-in-student-loans-to-debt-collection-company-8961790.html

Student Loan Book Worth £890m Sold For £160m, Government Confirms

Could they be the next consumer bust? Education debt is soaring. Student loans stood at $1.2 trillion as of May, up 20 percent since the end of 2011, according to the Consumer Financial Protection Bureau. That doesnt include debt that students put on the credit card, or that their parents put on the house through home equity loans. Student debt is now second only to mortgages on the list of things weighing down family budgets. Tuition has been rising faster than personal income for decades, but thats the smaller factor behind the recent debt explosion.
Source: http://www.stltoday.com/business/columns/jim-gallagher/are-student-loans-the-next-big-bust/article_b371a567-6336-51ea-913f-47242585a289.html

“The private sector’s expertise makes it well-placed to collect this debt and the sale will also help the Student Loans Company (SLC) to concentrate on providing loans to current students.” The low recovery rate on the 1990s loans means the sale price is likely to be only in the tens of millions of pounds, reflecting the distressed nature of the debts, people close to the situation said on Sunday. The deal will come at a sensitive time, just weeks after Royal Mail was floated with a valuation of 3.3bn. On Wednesday, Royal Mail will present its maiden results as a listed company, while Vince Cable, the Business Secretary, will make a further appearance before the BIS Select Committee amid allegations that the postal operator was sold too cheaply. The Government insisted that bidders for the 900m loan portfolio, which was given the codename Project Ariel, would be assessed against a strict set of criteria, although it did not say publicly what these would be. It added that the terms and conditions for borrowers whose loans were included in the sale would not change.
Source: http://news.sky.com/story/1173070/student-loans-ministers-to-unveil-900m-sale

“The private sector is well placed to maximise returns from the book which has a deteriorating value. The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans. Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans. But as noted in a HuffPost UK blog earlier this week, speaking to a parliamentary select committee last June, universities minister David Willetts told MPs: “In the letter that every student gets there are some words to the effect that governments reserve the right to change the terms of the loans.” Toni Pearce, President of NUS, said the move was “incredibly problematic” and would affect everyone who had taken out a student loan. This announcement is extremely concerning and is one that will see the public subsidising a private company making a profit from public debt, which is incredibly problematic,” she said. The impact of this sale wont only affect borrowers, but will affect everybody. “The simple fact is that having these loans on the public books would be better off for the government in the long run.
Source: http://www.huffingtonpost.co.uk/2013/11/25/student-loan-book-sold-160m-government_n_4336301.html?ir=UK+Politics

“I did not realize, like I said, about the $10,000 fee,” Ursula Nelson said. Nelson did not even know her $22,000 loan had ballooned to more than $30,000 until FOX 4 sat down with her. She put her loan in deferment while working on her master’s degree in criminal justice. “The interest is so high, it seems like I will be paying this until the day I die,” Nelson said. Nelson may be right.
Source: http://www.myfoxdfw.com/story/24067269/college-graduates-struggle-with-student-loan-spiral

The mortgage-style loans, which were taken out by students who began courses between 1990 and 1998, have been sold to a debt management consortium for 160 million. Universities Minister David Willetts said the private sector was best placed to collect the outstanding debt Credit: PA Wire Universities Minister David Willetts said the move represents “good value for money”, and would enable the Student Loans Company to concentrate on administering more recent loans. NUS president Toni Pearce said it was “extremely concerning” that the public would be subsidising a private company to make a profit from public debt. More top news
Source: http://www.itv.com/news/update/2013-11-25/student-loans-worth-nearly-900m-sold-off/

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