The government is expected to press ahead with the sale of some of the student loan book – a decision that is likely to spark protests across university campuses because of fears that it will increase the financial burden on those studying for degrees.

The government announced in June that it planned to sell student debt to private companies before the election. The sale will cover £900m of debt on loans taken out by students, mainly in the 1990s.

There have been two previous sales of student debt but this one, confirmed by the Treasury chief secretary Danny Alexander, will be the largest and will help reduce net public debt.

The deal would encompass mortgage-style loans made in the 1990s, the last of their kind still in public ownership, but not the income-based repayment loans of the kind currently offered by the government.

The plan will do little to endear the Liberal Democrats to students 18 months away from an election. But Nick Clegg may have decided the student vote is largely a lost cause after he felt forced to break his pre-election pledge in 2010 not to increase student tuition fees.

Ultimately, the coalition wants to sell the entire stock of student debt, which has a face value of £40bn. There has been concern that this can only be profitable for private companies in the long term if the cap on interest for repayments is raised, increasing the cost of student debt.

Both the universities minister, David Willetts, and the business secretary, Vince Cable, have said any private company that buys the student debt will be prevented from raising interest rates on the loans.

Students organised a day of action last week to protest at the sale, claiming the selloff opens the door to a retrospective rise in the cost of tuition fees.

A government-commissioned study, conducted by investment bank Rothschild, included an option to increase interest rates for 3.6 million borrowers who took out student loans over the past 15 years. This would obviously make the loans more attractive to prospective private buyers.

In June, Cable said: "I have ruled out categorically changing the terms of interest rates charged to graduates with existing student loans taken out before 2012. The Rothschild study which was completed in 2011 was a feasibility study which looked principally at how to sell the student loan book. Work on the feasibility of selling the outstanding student debt continues.

"However, the study also contained a proposal which suggested a change in interest rates charged to existing students – that proposal was comprehensively dismissed two years ago and will not be taken forward by this government."

The Rothschild study also looked at underwriting the loans with a "synthetic hedge", which would see the government compensating any buyer of the loan book against the risk of lower than expected returns. Although Cable rejected raising interest rates for existing graduates, he did not rule out the "synthetic hedge".

The business department confirmed an announcement will be made on the sale of the student loan book when the stock exchange opens on Monday.