The U.K. government said last week that it is looking into the possibility of selling part of its GBP16 billion ($31.3 billion) student loan book to the private sector. Although nowhere near the volumes of the U.S. student loan market, this considerable amount could pave the way to establishing a noteworthy U.K. securitization market.
According to Deutsche Bank research, the U.K. government sold GBP4.1 billion of student loans to the private sector in the late 1990s, which was the last time that it did, and some of these loans ended up in securitizations. So far, the market has seen only two securitizations backed by U.K. student loans via the Thesis and Honours deals. In both these deals, the government's role was limited to providing the first loss protection and cash flow related to the subsidy package.