Student loans sold by government

Loans worth £890 million — taken out by students between 1990 and 1998 — will be transferred to private company Erudio Student Loans, an investment trustee funded by CarVal Investors and Arrow Global, in 2014.

These are the last of the mortgage-style student loans on the Government’s books, following two previous sales in 1998 and 1999 which passed a combined £2 billion of the loans to the private sector.

About a million borrowers were retained by the Government’s Student Loans Company, and 69% of those have subsequently fully repaid their debt. Universities and Science Minister David Willetts said: “The sale of the remaining mortgage-style student loan book represents good value for money, helping to reduce public sector net debt by £160 million. The private sector is well placed to maximise returns from the book which has a deteriorating value.”

The deal means Arrow Global — which was floated last month — will by 2014 look after student loan assets with a face value of more than £1 billion. It said it had invested £11 million to buy the student loans portfolio sold today.

Shares in Arrow Global, which debuted at 205p each, slipped back 2p today to 242.5p.

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