On the impossibility of replacing government student loans with loans from private lenders
Nick Barr is a professor at the London School of Economics. He is an eminent theorist of income-contingent repayment loans and in the 1990s helped Hungary’s government set up its loan scheme, which is entirely funded through the private purchase of bonds linked to graduate repayments. The scheme has been running for more than 10 years and has a RAB charge of less than 5 per cent.
Barr is critical of the loan scheme now confronting the UK, and of the educational aims of the recent higher education White Paper. Of the latter, he told a select committee on higher education: “It is not clear how a structure designed to reduce price will lead to improved student experience.”