The Office of National Statistics (ONS) in the UK has announced today the findings from its review on the financial treatment of student loans in the public sector finances and national accounts.
The ONS has decided that the best way to reflect student loans within these statistics is to treat part as financial assets (loans), since some portion will be repaid, and part as government expenditure (capital transfers), since some will not. This is described as the partitioned loan-transfer approach.
This new system proposed by the ONS for the treatment of student loans could add an estimated £12bn to public sector net borrowing in the financial year ending 2019. This is a significant increase when put in the context of last year’s deficit of £40bn.
Stephen Scott, RLB National Head of Education said ‘Philip Augar’s review looking at the whole of post 18 education funding was delayed earlier this year to accommodate this announcement from the ONS. This will add further political pressure to cut fees and reduce the impact on the deficit but does nothing to solve the conundrum of how to fund Universities. Philip Augar and the post 18 review panel have much to consider over the Christmas break.’