The government is losing money on the current English higher education fee loan model, and it does not account for this loss.
It’s one of those technical national account issues (expertly illustrated by IFS) that neatly illustrate the gap between the way the student finance system is perceived and the way it actually works. And it could have fairly serious repercussions for university funding and student repayments.
If you are hoping against experience for an increase in fee levels (or equivalent sums via the OfS allocation system) this is a very solid reason not to spend too much time hoping.
The issue relates to the cost to the government of borrowing money. UK government borrowing works via the issuing of “gilts” (basically government bonds, so-called because the old paper certificates used to have a shiny edge).
