The invisible bag of rocks every student is forced to carry around after they graduate just keeps on getting bigger.
After another broken promise from Nick Clegg to oppose the rise of student tuition fees, the burden of debt students have to accept before they begin higher education has reached unprecedented levels.
In an increasingly technological world, if Britain wants to remain at the forefront of business and economics, our country must have a highly educated and well trained work force. Yet supposedly in the midst of an economic recovery the squeeze on the next generation doesn’t appear to be letting up.
A recent study provides some useful statistics on the effects of the 2012 rise in tuition fees on graduates and the impact it will have on the nation’s coffers. Loan repayments are made on a sliding scale with income and any unpaid debt written off after 30 years. With the cap for repayments lifted to £21,000, the lowest 10% of graduate earners will actually repay less under the new system. The highest earning 10% will pay back substantially more, an estimated £60,600 compared with £25,500 for their predecessors in the class of 2011. Real interest rates of up to 3% now accrue debt from the START of university as opposed to after graduation. Previously, interest charged on student loans had been set at the inflation rate – but with these new higher rates another step has been taken towards turning a profit on student debt. On average, graduates can now expect to repay roughly £15,000 MORE than they would have with the old scheme.
Even with this massive increase in debt a large chunk will still be written off. Only about 5% of graduates can expect to have repaid their loan in full by the time they turn 40, compared to 50% under the old system. As people will be paying off their debt later in life, 73% of all graduates will have some debt written off, on average about £30,000 per student. London Economics has calculated the breakeven point for government loan repayments to be 48.6% and current projections estimate 45% of loans will go unpaid under the new scheme.
In one fell swoop David Willetts managed to encumber the next generation brave enough to get a degree, while balancing on the dotted line between the red and black of the Tory cheque book.
Fortunately this hasn’t perturbed school leavers from applying to university. According toUCAS, after a two year lull around 2012-2013, the number of applicants reached record highs this year, 2014. Applicants from disadvantaged backgrounds haven’t been dissuaded from applying either, with a 2% increase from 2011. Although that’s nothing to shout about, it shows that university is accessible for everyone regardless of increasing debt.
The real threat to our higher education system isn’t the increase in fees, but is instead staring at us from across the Atlantic. Had the plans not been stalled by Vince Cable, George Osborne’s austerity economics would be right on course with his attempts to sell off our student loan debt. Following in the footsteps of the US, the insidious march towards privatisation continues. The amount of revenue this sale would supposedly generate is approximately £2.3bn by 2020, which is a drop in the ocean compared to the national debt. The massive amount of debt US students must accept before getting an education is putting a tremendous squeeze on their middle class, yet another way the elites have found to suck money up from the 99%.
The average American student is accepting $33,000 of debt for their education, but that number can easily soar to six figures for some institutions. America is also number one in debt-burden for graduates and in some circumstances it can completely cripple them financially. After graduation interest rates can rise to 5.4% leaving many only able to pay off the interest. Unlike all other forms of debt, student loans in America cannot be discharged in bankruptcy, it can even be transferred onto family members in the event of death. This is a truly terrifying thought; many Americans will never pay off their loans and will be shackled by debt forever. We must fight to ensure such a draconian policy can never rear its ugly head in Britain.
There is however, some light at the end of this pretty grim tunnel. It should not fall to students to subsidise the government for their education. Green Party policy would scrap tuition fees and re-introduce grants for students to meet living costs. Scottish nationals get to study for free and Germany has recently made university free for domestic AND foreign students.
Being told it will break the bank is a lie, it can be done; we just have to fight for it. In Germany protesters took to the street on mass and removed officials who supported fees in subsequent election cycles. They believe that higher education is a right and not a privilege, even with a conservative government they have won the battle and set an example for us all.