The Lib Dems have criticised government plans to sell off the English student loan book in a bid to raise £26 billion.

It comes as part of a wider plan to sell of public assets, including playing fields, libraries and council estates, in a bid to reduce public debt.

Treasury spokesman, Vince Cable has branded it a "car boot sale", saying: "Selling off what is left of the family silver is not going to solve the long-term problem of Britain's structural deficit.

"Selling them off now when markets are depressed is not the most prudent way to go."

Prime Minister Gordon Brown insists the selling of public assets is better for the economy than the Tory plan to launch immediate spending cuts. He further states that cuts in other areas such as front-line services would be more detrimental.

A spokesperson for the Department of Business, Innovation and Skills told The Journal that "the sale of the student loan book will not change anything for students" and reassured that this would be a condition of the sale.

The announcement, which affects English students studying in Scotland, comes after the Sale of Students Loans Bill was passed through Parliament last March. The bill allows for the government to sell off the public asset at any point.

However, macroeconomics professor at the University of Glasgow, Gabriel Talmain told The Journal : "Future students, or current students who are thinking about getting an additional loan may be affected.

"The government may feel that they cannot afford to offer the same guarantees as before. Students who need a loan would have to turn to the private sector. As long as the government was guaranteeing students' loans, banks were quite sure that their loans would be repaid.

"If this guarantee is missing, banks will have to take into account the possibility that the individual students may not be able to repay their loans. They will have to charge a higher interest rate, maybe shorten the maturity of the loan, or perhaps refuse to make new loans altogether."

When asked if the same could happen in Scotland, Mr Talmain said: "The Scottish government is getting a large grant from London. It is unlikely that this grant will remain unaffected by the very large UK government deficit. With money getting tight in Edinburgh, is it realistic to think that higher education will escape completely?"

The government is currently monitoring market conditions and promises to sell only when the best deal can be struck. Gordon Brown, however, has also indicated he hopes to sell within two years.

Due to this uncertainty no selling value has been put on the student loan portfolio of around £18.1billion, but the most likely potential buyers are thought to be banks who would be attracted to the interest and repayments.

The government will maintain control of loan arrangements and regulations, which includes interest rates and repayments, and the administration will still be dealt with by the Student Loans Company.

Other assets up for sale include the Tote bookmaker, Channel Tunnel rail link and the UK’s 32 percent stake in the uranium processing company Urenco. The government hopes that these assets, together with the student loans portfolio will raise £3 billion.