By 2001 student loans, regarded as assets in the Crown's balance sheet, are projected to be 4.3 billion dollars, about the size of Telecom when it was sold. It is hard to escape the view that this asset has been created by highly manipulative accounting under the guise of transparency and responsibility. The aim of the exercise seems to be to disguise part of government spending and obscure the actual level of taxes. Think about how the student loan asset has been achieved. To a large extent the government has reduced spending on education thus pushing up the budget surplus, then lent that surplus back to students at a high interest rate.
Students then spend it on education.
Nothing much real has happened but this sleight of hand allows the government spending figure to be lower. Costs are shifted to students, not reduced for society as a whole. On the balance sheet, net worth of the Crown rises and net public debt falls giving the illusion of achieving improved fiscal responsibility . Net debt is gross debt minus cash-like assets. Believe it or not, loans to students are netted off against gross debt along with cash as if they are secure, matching financial assets.