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This question was brought on by the recent news that government owned student loans in the UK are being sold off to a private company.
How is this financially beneficial for the government? The way I see it, a company would only buy the loans for less than what can actually be recovered, in which case the government could gain financially by just keeping the loans themselves.
This kind of information is typically covered in a undergraduate finance class. You could probably get an older version of a text book inexpensively from Amazon. I'm not going to focus on the UK specifically, because this happens in many governments (and in the US, it happens through private student loan companies).
User RedGrittyBrick hit the nail on the head in his comment: money today is better than money tomorrow.
Every loan comes with the risk that it won't be repaid. By selling loans, the government removed the risk on non-payments entirely.
If the loans had fixed interest rates, it could be that the interest rate provided by the market is more attractive now (or is expected to be in the future). If that were the case, they would want to sell their current loans (with the worse interest rate) to make more loans (at a better interest rate).
Banks often sell loans when they need cash to make other investments or loans. A government might use the same reasoning when deciding to sell loans to put the money in their general fund, to be used for general operating expenses.
I don't follow UK politics very closely, but the Telegraph reported that the current Treasury minister has a goal of reducing the deficit. Selling loans isn't a good way to boost your revenue (since the value of the future payments is hopefully larger than the amount loaned due to interest), but it would provide immediate cash to pay down a deficit.
indigochild's answer doesn't address it well at all in my opinion. Yes, all the factors mentioned are correct but they will be factored into the cost. In the long run the government is worse off for selling off assets.
Governments sell off assets to make the budget numbers look better. That's it.
How is this financially beneficial for the government?
Government's sell off their assets for lots of reasons: they want to deploy their capital more effective somewhere else. They need to monetize their assets. They no longer want to be in the business of making student loans. They want to privatize. They want to sell of their bad assets. They want to shrink the size of the government. ....
The list goes on.
