Erudio Student Loans is a
consortium
A consortium (plural: consortia) is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for ...
formed by debt collectors
Arrow Global and
private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...
firm CarVal Investors in 2013.
The firm was the successful bidder in an auction to buy
non-performing U.K.
student loans
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest r ...
in 2013, paying £160m to buy debts of £890m taken out between 1990 and 1998. Of the loans purchased, 46% of the borrowers were earning below the amount at which they were required to make payments, 14% were making payments and 40% were not making any payments.
The Independent noted that
debt collector
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The de ...
s Arrow performed very poorly during the credit crunch and that similar organisations had a reputation for unwarranted threatening letters, phone calls and visits;
David Willetts
David Linsay Willetts, Baron Willetts, (born 9 March 1956) is a British politician and life peer. From 1992 to 2015, he was the Member of Parliament (MP) representing the constituency of Havant in Hampshire. He served as Minister of State for ...
had ignored the implications for former students, his prime objective was to reduce public debt. CarVal Investors,
private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...
firm provided most of the cash.
Criticism
Since taking over the loans, Erudio has faced criticism from current loan holders and also from financial commentator Martin Lewis for not being able to cope with the large volume of deferral requests and for mistakenly taking cash from loan holders' accounts. According to the Guardian, some Erudio customers have noted an attempt to change loan conditions. Whereas the SLC could only pass on details of payments in default, Erudio has written to these deferred loan holders asking them to agree to let the company pass on details to credit agencies. This potentially prevents them from taking out loans in the future.
In April 2016, another error saw the company demanding repayments after it failed to send out 250,000 deferral forms, with some customers declaring themselves "bewildered by Erudio’s administrative problems". The company denied the omissions were a tactic designed to trick people into repaying the loan and issued a public apology.
See also
*
Sallie Mae the American-based corporation for student loans that is behind Arrow Global.
*
Student loans in the United Kingdom
Student loans and grants in the United Kingdom are primarily provided by the government through the Student Loans Company (SLC), an executive non-departmental public body. The SLC is responsible for Student Finance England and Student Finance Wales ...
External links
Arrow GlobalCarVal InvestorsErudio Student Loans
References
Financial services companies of the United Kingdom
2013 establishments in the United Kingdom
Financial services companies established in 2013
Education finance in the United Kingdom
Student loan systems
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