Student debt – Unfair and Unnecessary

Student debt – Unfair and Unnecessary

Student loan debt in the UK has risen to more than £100bn for the first time, underlining the rising costs young people face in order to get a university education.

According to the Student Loans Company, outstanding debt on loans jumped by 16.6% to £100.5bn (just England was £89.3bn) at the end of March 2017, up from £86.2bn a year earlier.

Rising student debts come at a challenging time for consumer finances in general in the UK, which are being squeezed as prices rise at a faster pace than wages.

Student debt is an additional drain on people’s resources for an “astonishingly long time”, sapping the purchasing power of the graduate population.

Following the introduction of the £9,000-a-year tuition fees there will be longer-term implications of rising student debts in the UK.   As graduates respond to the rising debt crisis, it will affect their attitudes to pensions, savings, buying a house.

Although the Student Loan Company is a not-for-profit organisation owned by the governments UK, Scotland, Wales & N.Ireland, some of its debts are now being sold to private investors.

The government sold two tranches of the mortgage-style loans to investors.  Firstly to Greenwich NatWest raising £1bn, and secondly to Deutsche Bank and the Nationwide Building Society, also raising £1bn.  The SLC’s remaining mortgage-style loans, for which payments were mostly in arrears, were sold to a consortium, Erudio Student Loans (a consortium of private sector debt collectors and a private equity firm), in 2013 for £160m.  In 2014, the government indicated that it would start selling the SLC’s £12bn book of 1998 – 2012 ICR loans to improve the UK public finances.

Labour Manifesto 2017:

Labour believes education should be free, and we will restore this principle.  No one should be put off educating themselves for lack of money or through fear of debt.

There is a real fear that students are being priced out of university education. Last year saw the steepest fall in university applications for 30 years.

Since the Conservatives came to power, university tuition fees have been trebled to over £9,000 a year, and maintenance grants have been abolished and replaced with loans.

The average student now graduates from university, and starts their working life, with debts of £44,000.

Labour will reintroduce maintenance grants for university students, and we will abolish university tuition fees.

University tuition is free in many northern European countries, and under a Labour government it will be free here too.




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