House of Commons
Session 1997-98
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Arrangement of Clauses (Contents)

Education (Student Loans) Bill
      This Bill amends the Education (Student Loans) Act 1990. The Government's intention is to sell a portfolio of public sector student loans to financial institutions. The Bill will facilitate such sales by enabling the Government to make subsidy payments to the purchaser. It will also safeguard the position of the taxpayer, the borrower and the purchaser by preventing certain loan terms from being changed once a loan has been made.
      Clause 1 provides for the assignment of public sector student loans and allows the Secretary of State to make arrangements in connection with such assignments. Those arrangements may include the payment of subsidy to assignees, provision as to the administration of loans which have been assigned, and the power in some circumstances for the Secretary of State to repurchase or direct a further assignment of the assigned loans.
      Clause 2 provides that the key terms of an agreement for a public sector student loan (which are to be prescribed by regulations made by the Secretary of State) are not to be changed by further regulations after the agreement has been made. There will also be key terms which do not change in relation to existing public sector student loans.
      Clause 3 ensures that arrangements for the administration of public sector student loans will be contractual in nature rather than operate to confer public law functions.
      Clause 4 provides that an Order in Council which makes corresponding provision in relation to Northern Ireland will be subject to the negative resolution procedure.
 Financial effects of the Bill
      The Bill will allow the Secretary of State to incur expenditure by making payments to the purchaser of the portfolio of student loans and by repurchasing some of those loans in particular circumstances.
      The level of spending arising from the Bill and the extent of the overall increase in public expenditure will depend on the amount received by the Secretary of State (through the Student Loans Company) for the sale of the loans portfolio and on the size of subsidy payments to be made by him over a number of years. The sale price and subsidy payments will be determined by competitive tender and also, in relation to the subsidy payments, by such factors as the rate of inflation from time to time and the extent to which borrowers default on their loans.
 Effect of the Bill on public service manpower
      The Bill will not lead to any increase in the number of staff employed by the Department for Education and Employment. Some aspects of the Bill may cause the number of staff employed by the Student Loans Company to increase a little, but any such increase would be more than offset by the reduction in numbers which would occur if the purchaser of the portfolio of student loans decided not to use the Student Loans Company to administer the loans.
 Business compliance cost assessment
      The Bill has no cost implications for business. In these circumstances a compliance cost assessment has not been undertaken.

© Parliamentary copyright 1997
Prepared 11 July 1997