This post was originally published on this site.
Thanks for your article (Student loans: ‘My debt rose £20,000 to £77,000 even though I’m paying’, 23 January). I began my studies in 1999, part of the New Labour push to widen access to university. Had I known then that I would still be repaying this “loan” for the rest of my working life, I might have thought twice.
The original premise was that student loans were a small, manageable contribution, easily cleared once you entered work. At the time, it was routine for more privileged families to take the low-interest loan even if it wasn’t needed, park it in savings and repay it later in a lump sum. For those of us who relied on the loan simply to live, that option never existed.
Like many friends from working-class backgrounds, it took years to earn consistently above the repayment threshold. Some are now in their 40s and have still never reached it. Unlike later student loans, there is no write-off after 20 or 30 years. For those who entered university between 1998 and 2006, the debt remains until age 65, while interest has more than doubled the original amount.
This has created a forgotten cohort, encouraged into higher education in the name of social mobility yet left with a lifelong financial burden if we lack family wealth or early access to opportunity. While later cohorts have a fixed write-off date, working-class graduates are still penalised when secure work comes later, paying for longer and carrying the psychological burden of debt through the years when life is most expensive.
If the government is serious about supporting working-class people, it must confront how student finance across all cohorts penalises delayed access to opportunity rather than lack of effort.
Gina Tsang
Liverpool
Rupert Jones well describes the inequities in the student loan system, but it is even worse than he reveals. The student loan debt is a part of the national debt. The interest accruing to a graduate’s debt therefore increases the national debt on which the Treasury then pays interest. So the interest paid by graduates is a mirage.
The solution is a zero-interest regime. This would remove the inter-cohort inequities that arise as loan schemes change, and would mean that debts are paid off more quickly, to the benefit of both graduates and the national debt. Write-offs would be drastically reduced, another saving to the public purse.
A further inequity of the current scheme is that because repayments are a surcharge on earnings, high earners pay off loans more quickly than lower earners, who pay more because of accrued interest. With zero interest, high earners pay off even more quickly, to the benefit of public finances. And lower earners take more time but do not have to pay more. So everybody is paying the same for the same product. As a byproduct, such a simplified system would dramatically reduce the costs of the Student Loans Company.
Norman Gowar
Emeritus professor, University of London
It was so good to read a feature on student loans and the spiralling debt many young people face – my 26-year-old twin daughters included. The system is horrendous, with so many young people facing a lifetime of debt under a contract over which they have no control.
Moreover, many of these young people used their maintenance loans to pay rent to private landlords, whose mortgages are therefore effectively being paid by the taxpayer. Any increase in equity is enjoyed almost risk-free by these landlords, while the debt is shouldered by the young, many of whom will struggle to ever buy their own home. Am I alone in considering this very unfair? Why not tax some of this increase in equity to reduce the debt burden for young people and taxpayers alike?
Debbie Balderston
Kingswinford, West Midlands