Whilst (prospective) students and young people have undoubtedly never stopped debating student loans, journalists and politicians have hotly debated the topic in recent weeks. The Guardian, for example, has published several articles in the last few weeks here, here and here and Labour are proposing wiping out student loans altogether. With the total student debt now above £100 billion and no solution in sight, it is important to reflect on this debate and discuss the way forward.
Take, for example, Grace who is 25 and featured in this article. Facing a lifetime of debt at over 6% interest, the current prospects are grim and it isn’t surprising if this puts someone off studying altogether. After four years at university, Grace was one of the first to pay £9,000 of fees per year and now owes over £69,000. Like many others, she hadn’t anticipated the £8,000 in interest her student loan racked up while still at university and all she knew was that she “wouldn’t be repaying until [she] earned £21,000 and [her] outstanding debt would be written off after 30 years.” Additionally, she had to pay for an extra year after choosing the ‘wrong’ degree and having to add an extra year. This reconsideration cost her an extra £15,000 and is a shocking price to pay for a young person who had the courage to admit she’d made the wrong choice for her and change degree. As even Andrew Adonis, the architect of the student loans system, called for tuition fees to be scrapped, the question is — where are we headed as universities are set to increase their fees to more than £10,000 a year by 2020?
Following a heated election, it seems unlikely that parties won’t be forced to consider new directions to deal with student debt. After all, analysis by the Institute for Fiscal Studies found that graduates in England left university with the highest student debts in the developed world due to a combination of high fees, interest rates and the replacement of maintenance grants with loans. The Institute calculated that on average students leaves university with over £50,000 debt — a figure that rises to an average £57,000 for the poorest students who have to borrow to cover their living costs as well. This is in stark contrast to the US, which is famous for its high fees, however, the average debt of graduates there is ‘only’ £28,000. Coupled with this is the fact that the Institute estimates that three quarters of graduates will never actually pay off all their debt, so some experts believe the current system is out of control. Worryingly, it remains unclear what the longer-term implications of rising student debts will be and how this will affect pensions, savings or buying a house as debt will continue to be an additional drain on people’s resources for an incredibly long time.
So, what do you think about the current debate on student debt? What do you see as the way forward?