Shifting the risk

4. loans: reducing risk

If future governments stick to the course mapped out by the coalition, then by 2046 the government will be owed almost £200 billion in student loans. The generous support promised to low-earning graduates means that the plan is for the government to write off about 30p in every pound lent. But whether the losses for the Treasury will turn out to be 30 per cent or 40–50 per cent cannot be known for decades.

So in the recent White Paper on higher education, Students at the Heart of the System, the government made reducing the risk of excess losses on student loans its main policy objective. In turn, the steps taken to contain the risk are capable of shaping the entire system of higher education in England.