Friday, September 09, 2011

How to pay student loans

Readers will be aware that the UK will see much higher tuition bills for students from next academic year. Fees will rise from about £3,350 at most universities up to £9,000 for many courses. Students will receive loans up front to be paid no earlier than six months after graduation and only where they earn £21,000 (or about £18,000 in 2011 rates).

One curious condition was that students will be unable to pay off their student debts early -- indeed, there may even be penalties for paying off too much too soon. (Details here.) The idea is that this would prevent more wealthy students benefitting more than others: the more wealthy would be more able to pay off loans earlier and, thus, pay back less because their loans would accrue less interest. This concern -- that the wealthy might pay less than others for their higher education -- is particularly acute amongst Liberal Democrats in the coalition government.

I suspect that this is a mistake. There is much wrong about the plans for tuition fees from next year (I favour no fees) and it is highly important to consider how the least advantaged will fare relative to others in any new scheme. However, these major concerns do not cancel the further problem of a policy whereby the state would force students to take on significant debts and forbid any student from paying these debts more quickly. Instead, students will be saddled with their university debts throughout much of their working lives. And all as part of a wider government programme of harsh austerity measures aimed at ensuring today's debts are not passed onto future generations.

I've said it before and I say it again: I have never in my life seen a worse policy on higher education. The current proposals are ill conceived, poorly worked out, and contradictory at best. These problems do not mean that there is not much that could be done to change - and improve - the funding of universities and assisting more young people to enter academia. But we all deserve far better than this.

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