Student Loan Ruling: Good for the books, but what about the students?

Student Loan Ruling: Good for the books, but what about the students?

The Office for National Statistics (ONS) are calling for a new treatment of student loans in public sector finances and national accounts, but what will this mean for students?

On 17th December 2018 the Office of National Statistics (ONS)  released an article calling for student loans to be added to the budget deficit, this comes in light of their recent review of the loan system in April 2018 being driven by the Treasury Select Committee and the House of Lords Economic Affairs Committee.

The Treasury Committee recommend that,

“loans that are intended to be written off are, in substance, a partially repayable grant rather than a loan”

ONS should re-examine its classification of student loans as financial assets and consider whether a portion of the loan should, in substance, be classed as a grant.”

“The ONS stated “Estimates of the proportion of student loans that will be cancelled in the future have been rising in recent years, and are now a significant proportion of the total value of the loan book.”

Loans going unpaid

Recent statistics show that 40-45% of student loans go unpaid on average as they get written off after 30 years if not paid back in full. However, the government does not currently include this in the deficit, which means the UK looks in better financial shape than it really is.

If the unpaid student loans were added to the deficit it would be increased by £12 billion and could result in a reduction in student fees.

The treasury committee have welcomed the change with Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, commenting,

“As the Treasury Committee concluded in its report on student loans, the current accounting rules allow the Government to spend billions of pounds of public money without any negative impact on its deficit target at all.”

“Today’s announcement from the ONS, which will improve transparency of the public finances, is welcome.”

“Ensuring that Government spending is properly recorded allows it to be properly scrutinised.”


But it seems the new treatment may be a double edged sword as reduced fees may also result in a cut in student intake and reduced facilities for universities.

What about the students?

For student cities like Bristol this may cause more harm than good as many tower blocks have been transformed into student accommodation and with a large amount of the city aimed towards students spending.

A student body representative from the University of the West of England has shown concern towards the changes as courses and funding have already been reduced and it is unclear what this new approach will mean for the future.

“I am worried that as the student debt will be included in national deficit means that the government will make cuts across higher education. We have seen the aggressiveness of austerity and I am a afraid that we will see similar punitive measures.  Our courses are already underfunded despite the £10,000 price tag. This may mean that the kind of courses that are on offer are limited and the higher education system is knee capped.”

At the moment it is undecided if student fees will be cut as the government are due to review tuition fees early next year and the ONS account will be taken in to consideration.

Student Finance England urge students to prepare financially

Just weeks after the announcement from the ONS the Student Loans company (SLC) urged students to get their finances in to shape ready for the new year.

Having made a range of improvements to their systems including e-signatures, SMS password reset options, and increased social media resources for online queries all in a bid to make the loan application process faster and easier for students.

Executive Director of Operations, at SLC Derek Ross warns,

“We are expecting to process almost two million applications in 2019 so it’s important that students apply as early as possible to get their funding in place – you can apply before you have a confirmed university place.”

“Students should start researching now to find out what funding is available for them and their parents or partners can help by pulling together key information including their income details and National Insurance numbers, which may be needed to support the application process.”

Financial adviser and university graduate Tom Morris of Ovation finance, Bristol shared his top money wise tips for new students starting university and how they can try to avoid going in to debt in the future.

Mr Morris advises students to,

  • Not blow all their maintenance loan during freshers week
  • Be aware of tax codes when taking on student work to avoid being over taxed
  • And remember that students don’t pay council tax and should remember to make the council aware when moving in to a student property.

The SLC also add that students should aim to make an early start with their application, preparing personal details and remembering to check eligibility for a maintenance loan to help with the costs of living.


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