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Government’s HE funding plans are like a Ponzi scheme, say policy experts

The Government’s plan to fund removal of the cap on student numbers through the sale of the student loan book has “all the characteristics of a Ponzi scheme”, higher education policy experts have warned.

While increasing student numbers will add to the current costs of higher education, the sale of loans cannot be counted on to provide sustained future income, a new report from the Higher Education Policy Institute says.

In an updated analysis of the potential costs of the Government’s reforms of HE funding, HEPI warns that policy-makers’ estimate that up to 40 per cent of student loans may never be repaid could prove to be too optimistic.
This could have an impact on the prospects of selling the loan book, which even if successful will only make a limited contribution to the cost of additional student numbers, it says.

“The loan sale proposed is based on a loan book built up over many years; it cannot be repeated, at least not as frequently as would be required. It has many of the characteristics of a Ponzi scheme, relying on diminishing future income to make good increasing present deficits,” the report adds. 

Get the full picture from HEi-know: Briefing Report 119