It wasn’t in relation to university that I first came across the organisation Rethink Repayment, which campaigns for a fairer settlement on student debt. I was looking into the astronomical numbers of young people who still live with their parents. It’s now more than a third of young men and more than a fifth of young women, statistics that get even crunchier when you realise that “young” describes anyone under 35.
There were various reasons – some had gone home after a health crisis, some really liked their parents, some were battling unemployment, but the single unifying theme was student debt. Those on incomes too low to start repaying couldn’t make rent; those in the lower repayment bracket (an annual income of £25,000 or thereabouts, depending on your loan plan) still couldn’t make rent, because they were spending 9% of their income repaying. And those on more than £50,000 were keeping less than 50p in every pound they earn because of their marginal tax rate.
It’s always been sold to students when they take on this debt that it won’t count against their mortgage raising capacity, which technically it won’t – but any affordability check by a mortgage company or letting agent will factor in the monthly repayments. It feels tactless to bring this up, just as a fresh wave of students heads off, with bigger, more exciting things on their minds than long-term debt. Yet it also feels remiss not to mention the fact that they’re being absolutely had.
Florence, 29, who works as a solicitor in commercial litigation, is still living at home. She told me: “A lot of the time I’m reviewing contracts, and saying: ‘This is enforceable, sue them.’ The holes in what we were told are shocking. If student loans had come from an institutional lender, we would have a class action lawsuit.” Without lingering on the unedifying details, such as how we’re all feeling about Nick Clegg nowadays, a quick recap on what the debate around student fees looked like when they were first hiked to £9,000 in 2012.
There was a lot of anxiety about whether the government would ever get its money back, or whether a huge amount of this debt would have to be written off – what we didn’t factor in back then was that, this being the government, they could make the rules. If they wanted the interest on student loans to be set at the Retail Prices Index (RPI) measure of inflation, plus up to 3%, they could simply snap their fingers and make it so. We talked a lot, too, about what those capped fees meant for universities – 10 years ago, £9,000 wasn’t enough for some courses but it was more than they needed for “classroom subjects” (a lot of humanities), which could then cross-subsidise.
Now, with fees only increased to £9,790 in more than a decade, they often don’t even cover humanities courses – so worries about the sheer viability of what was previously one of the nation’s most successful sectors were well founded. The students themselves were almost a side issue in this debate: the promise was that the debt would be more than offset by their increased earning capacity, once they had a degree, and, anyway, wouldn’t affect them until they could well afford it. This has turned out to be wildly untrue.
Extract — continue reading at the source.
