benjii Posted 12 October, 2009 Posted 12 October, 2009 Presumably there will be some sort of regulated revenue stream paid by the government as an administration fee to whoever takes this on otherwise there is no commercial incentive at all to do it unless the sale price is massively discounted or there are plans to change the system in the future that can be capitalised on by the buyer of the book. On the face of it, what a bizarre idea from the Government.
Ponty Posted 12 October, 2009 Posted 12 October, 2009 It happened with the old student loans too. Mine was sold by the government to some company in Glasgow, who changed the interest rate straight away.
benjii Posted 12 October, 2009 Author Posted 12 October, 2009 (edited) The current interest rate is 0% which is one of the reasons why I can see no commercial sense behind this! Edited 12 October, 2009 by benjii
benjii Posted 12 October, 2009 Author Posted 12 October, 2009 "Would you like to buy a debt with a negative return?" "Er.... no thanks."
benjii Posted 12 October, 2009 Author Posted 12 October, 2009 It happened with the old student loans too. Mine was sold by the government to some company in Glasgow, who changed the interest rate straight away. The Student Loan Company is based in Glasgow. I presume that's who you mean? They are still the administrators of the scheme but I think they are effectively government owned.
Clapham Saint Posted 12 October, 2009 Posted 12 October, 2009 The current interest rate is 0% which is why I can see no commercial sense behind this! Unless they sell it at a discount of course. Maybe they could sell them in "packets" containing some borrowers with reasonable credit ratings and others with less than perfect (lets call them "sub-prime") ratings. Then a purchaser could make a return by... oh.
benjii Posted 12 October, 2009 Author Posted 12 October, 2009 Unless they sell it at a discount of course. Maybe they could sell them in "packets" containing some borrowers with reasonable credit ratings and others with less than perfect (lets call them "sub-prime") ratings. Then a purchaser could make a return by... oh. Well indeed. It just seems such a bizarre choice of activities in the current climate. To effectively securitise the book but without the incentive of real-terms interest bearing securities.
Ponty Posted 12 October, 2009 Posted 12 October, 2009 The Student Loan Company is based in Glasgow. I presume that's who you mean? They are still the administrators of the scheme but I think they are effectively government owned. When I took my first student loan, in 1996, it wasn't administrated in Glasgow, and it was a 0% loan. When I started repaying it, it had moved to Glasgow and changed to 1.X%
thesaint78 Posted 12 October, 2009 Posted 12 October, 2009 Mine is set to 1% below the base rate so I'm making interest on the money I owe them at the moment
benjii Posted 12 October, 2009 Author Posted 12 October, 2009 Mine is set to 1% below the base rate so I'm making interest on the money I owe them at the moment Well that's not a "Student Loan" is it? "Student Loans" in the sense of The Student Loan Company (ie government adminstered) loans are pegged at inlfation so are real-terms neutral. Although we have had deflation this doesn't mean that negative interest charges are applied in repayment but rather that the interest charged is 0%.
$$$ Posted 12 October, 2009 Posted 12 October, 2009 Although we have had deflation this doesn't mean that negative interest charges are applied in repayment but rather that the interest charged is 0%. Pre 1998 ones are -0.4% FACT!
fish fingers Posted 12 October, 2009 Posted 12 October, 2009 My understanding is that written into the current legislation any company buying current loans would not be able to change the interest rate. However any future loans students take out could be affected and lent at a higher rate. Not an ideal scenario given the current level of student debt.
LGTL Posted 13 October, 2009 Posted 13 October, 2009 All I know is that I owe quite a bit of money and I don't bother or ever intend to look at the deduction from my wage slip.
Thedelldays Posted 13 October, 2009 Posted 13 October, 2009 I am not a student and happy that I never was
benjii Posted 13 October, 2009 Author Posted 13 October, 2009 All I know is that I owe quite a bit of money and I don't bother or ever intend to look at the deduction from my wage slip. Same here, but that's because I know the rate of interest is determined by reference to inflation such that in theory the "cost" of the loan is £0. If that was not the case and the loan provider started getting all commercial on my ass, I would be most displeased!
benjii Posted 13 October, 2009 Author Posted 13 October, 2009 I am not a student and happy that I never was I commend your stance in support of academic elitism.
Special K Posted 13 October, 2009 Posted 13 October, 2009 It's like finding an old copy of The Best of Mayfair in the loft and putting it up on ebay in the vain hope the money you get can pay the mortgage that month.
Saint in Paradise Posted 13 October, 2009 Posted 13 October, 2009 I wonder if SRS will be interested knowing how he just "loves" students so much, mind you if he bought it I bet interest goes up to at least 25%
Draino76 Posted 13 October, 2009 Posted 13 October, 2009 I may have borrowed something in the 90's but sorry; I don't recognise the statute barred debt.
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