students and the debt time-bomb


The question is: who should pay? Our universities crave more funding to be allowed to compete with the best in the world, whilst our students have an ever-increasing burden to bear whilst carrying out their studies- and well beyond. Should they have more from the general purse? (that’s our money given as tax) Or should they as individuals be asked to pay up to £7,000 per year to study? (and remember that’s just tuition fees, it doesn’t cover any living costs) Both the FT and the Guardian cover this story from different perspectives this morning. The focus of the debate is on the immediate affordability of the courses but little is written about the long-term consequences.

The financial crisis we have all experienced was largely caused by debt. Credit was made too available and simply became a way of life. Students have been not just encouraged to live like this but in most cases forced to do so. No wonder, then, that we had a generation for whom borrowing more seemed inconsequential. After all, leaving university owing £15,000 seems much like doing so owing £20,000. Personal insolvencies have soared.

The problem started by front-loading the problem as a loan. It created a culture of  ‘debt is normal’ and paying back seemed almost impossible. If we have learned nothing from recent years we will simply feed this damaging phenomenon. With around 50% of young people heading to higher education it would seem tragic not to take into consideration the effect beyond graduation. There needs to be a balance between tax-payer and graduate, for sure. But conditioning the next generation to have a fatalistic view to being ‘in the red’ will damage us all. Do I see anyone flying the flag for a graduate tax? Higher earners may end up paying more in the long-term but they do so with income to pay it. And at a time of significant graduate unemployment that’s surely a ‘win win’.

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