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Student Debt - AKA Slavery by Debt

 

Here in the UK, in the years following World War 2, most local education authorities (LEAs) paid students’ tuition fees and provided a maintenance grant to help with living costs whilst studying.  The maintenance grant was usually based on parental income and the Education Act 1962 made it a legal obligation for all LEAs to provide full time students with a maintenance grant which did not have to be repaid.  This resulted in a free higher education for everyone in Britain, meaning that children from a range of social and economic backgrounds could study for a degree without worrying about how they would finance it, a huge step forward for social mobility in the UK.

In the academic year of 1998/9 tuition fees of £1,000 were introduced under the Teaching and Higher Education Act 1998 and the maintenance grants were replace with repayable student loans for all except the very poorest of students.  The Student Loans Company was created to provide low-interest loans, averaging £390 for eligible students.

Fast forward to today and we’re seeing students leaving higher education with debts averaging £50,000, a sum which could have easily helped these students onto the property ladder back in 1998.  We’ve reached a stage where we’re seeing many young people finding it impossible to secure a mortgage and buy a property without some serious financial help from parents and this is reflected in the housing market.  Many prospective students are wondering whether a higher education is worth the financial costs involved – after all, why go into debt to get a degree if you still have no hope of getting a mortgage once you join the world of work?

Students take on the huge debts thinking that their degrees will be the doorway to jobs that enable them to pay back their debts and aspire to a comfortable lifestyle in the future.  This is no longer happening in many cases and those who are lucky enough to land a job that allows them to pay their debt and secure a mortgage are the lucky ones. Those who take the risk of higher education (and it does seem to be more a risk nowadays) risk entering into slavery by debt – a debt that they find it difficult to overcome.

In times past, young people purchasing their first home would generally only move home (often securing a larger mortgage in order to do so) once or twice throughout their lifetime and they would work towards paying off their mortgage after 25 or 30 years, leaving them with more disposable income and able to relax a little and enjoy the fruits of their labours.  The property boom seems to have put paid to that type of opportunity and upgrading to a larger home nowadays can mean never actually paying off the mortgage and living a life of constant debt.

Young people today are in an unenviable position of having to make some pretty difficult choices – whether or not to aspire to a further education without the guarantee of a job that pays enough to be able to buy a modest home.  This is a situation that we will need to address in the future if we want our best and brightest young people to reach their potential and become the professional workers that Britain will need for a stable future.