Student loans 'may be sold off'

The chancellor's Budget on 21 March is expected to be his last

The Chancellor Gordon Brown is reported to be planning to raise billions of pounds to spend on education in next week's budget by selling student debt.

There are believed to be many private companies that would pay a lump sum to be able to collect some of the estimated £16bn worth of student debt.

The Financial Times says Mr Brown will use the extra money to make education the centrepiece of his Budget.

The debt reduction would make it easier for him to meet his rules on borrowing.

The government raised £4.1bn between 1997 and 2000 selling the future revenue streams from student loan repayments.

The Student Loan company lent almost £3bn last year, which increased the level of government debt.

Money raised from any sale of the student debt would help the chancellor to keep government debt below 40% of national income.