Neil, glad I chanced upon this. Having spent a lot of time reading up on MMT theory (especially you and Bill M), I’ve decided to try and be more pro-active in commenting myself on social media, rather than just forwarding other links.
The other day a couple of friends on FB were having a discussion about student fees, with one asking “Where did the money come from?”. I decided this was the perfect opportunity to take the plunge and try and explain how things worked. Felt a bit like flying solo for the first time, but having just read your article I think the explanation I gave pretty much nailed it.
The area the discussion got into, but you’ve not mentioned above, are the recent plans from the Government to sell off tranches of outstanding loans as investments (eg. as described in this Telegraph article: http://www.telegraph.co.uk/finance/economics/10551267/Government-to-sell-12bn-of-student-loans-to-cut-deficit.html).
A friend had suggested they’d heard there was some stitch-up with the banks (but wasn’t sure what), and my guess is this what they were thinking of. As far as I can see (although the details are very brief), the plan would mean the SLC takes on the overheads for organising the loan, the money gets magicked into existence as per usual by the government, but then some private company gets to buy that loan (or some re-packaged form of it), to take it off the government’s balance sheet and presumably receive the future repayments due (not sure how the mechanics of that would actually work given HMRC collects the repayments via PAYE). Which seems like a nice little relatively risk-free earner for the investor*, and just a slightly different take on the usual privatisation of public services 'to save the government money'. Does that seem like a fair assessment?
*Probably a good chance said private investor is Mummy/Daddy to the rich kid that not only minimised their own tax liability by paying up front, but now gets to profit from someone else’s future tax liability…