Two new surveys on student debt levels point towards top-up fees increasing student debts:
Another survey of 2,000 for Push.co.uk predicts those who began courses last year will owe nearly £17,500 by the time they graduate, up 24% on 2006.
It says this year’s freshers will owe up to £21,500 when they graduate, with some of them struggling financially.
Editor of the Push.co.uk survey Johnny Rich said: “This is the first time we have had genuine figures about what top-up fees have meant.”
He claimed the figures meant the government’s financial support for students paying variable fees was not working.
“This increase is not just another rise. Some students are facing real financial hardship.”
More details over on the BBC.
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17 Comments
These numbers look made up. 33 of the 1960 students predict that they will be £12,857 and 14.28571429p in debt at the end of the course. Obviously no-one predicts that they will be in debt to the 8 decimal places of a penny, so obviously these numbers have been manipulated in some way. And for 33 to make the same prediction to 8 decimal places, independently is very, very unlikely. Indeed, 1633 of the 1959 “students” in the survey managed to predict their debt to the fraction of a penny – and to ten decimal places on average!
Similarly, the debt of 78 students ends in 857, but none end in 853, 854, 855 or 856! The evidence that this is manufactured data is overwhelming.
So far none of the anti-fee predictions have been born out. More students than ever are applying, there has been no decline in applications from lower income groups (not that there are many – too few lower income students get good A level grades), drop out rates have not shot up, etc etc.
The PUSH surveys have been carried out for years – one would assume to the same methodology.
Tim – instead of rubbishing them, perhaps you could comment on the trends that they highlight?
I left university with nearly 20k in debt and that was before fees! (I imagine these are average figures – 857 and .28571429 look like division by 7.)
I looked behind the averages, at the original data – they are on the push website. In 1633 of 1959 individual cases, push claim that students have predicted their debt to many decimal places. That just doesn’t seem plausible to me – any more than it is plausible to include a student who states that they will be £85k in debt!
I have never looked at the push data before, so perhaps something has gone wrong this year, or perhaps their data have always been this poor.
I am always happy to comment on a trend that has real data underlying it, but this does not. The data are a fabrication.
Obviously debt has gone up, but equally, we know that this is not putting students off: more are applying than ever before, and univ remains one of the best investments anyone can make.
I left Universioty with £10,000 of student loan debt along with overdrafts and other bits and bobs taking me up to the figure they say some freshers starting today will have because of top up fees. Forgive me if I’m not sympathetic.
Students who rack up Debt without seeing that their studies are worth the debt they are building are THICK, and deserve to suffer in their repayments.
Students should ensure that their Studies are financially worth it for the future.
I agree with Dizzy (ouch) and to a lesser extent Tim, I’ve got this open in a different tab to write about anyway; I graduated in 2002 with £11K student loan, £3K credit card and £2K overdraft; I paid back the latter two and am paying off the former as tax, at very affordable rates.
I strongly believe in education free at the point of delivery, and don’t like the idea of top-up fees, but find the reporting on this issue disingenuos at best and downright ignorant at worse.
The students interviewd on the Independent story come across as blithering idiots as well: “I had no idea the debt would be that large when I started my course. It was the high cost of living but mostly the loan I took out to see me through my degree.“–because basic maths wasn’t taught at your school then? “I hope I will be able to pay if off within four years.“–Why? The student loan is linked to inflation, no earnings, inflation goes up at a lower rate than earnings, you’re better off NOT paying it off if you can. Surely we can teach some basic economic sense into people at universities?
I despair at times. Amount students can borrow (at dirt cheap rates) is increased–level of student debt increases by roughly same amount. This is news and shock-horror because?
“I had no idea the debt would be that large when I started my course.”
Precisely. Whe whole purpose of commercial lending is to fleece the comsumer. In order to do this, the lender needs to conceal the ultimate level of indebtedness.
Unfortunately, when banks get too greedy for their own good the rest of us suffer – as we have seen this past week.
If all students bankrupted themselves on graduation the system would collapse. Thoroughly unethical and I don’t recommend it, but it is an ultimate sanction that students (with no assets) have at their disposal.
Anyone thinking of taking out a personal loan needs to write out 500 times: “Borrowing money means I pay more in the long run. Personal loans are a complete rip-off.”
Student loans were introduced as a means of saving public money. The more paranoid among us, however, might conclude that the real reason was to lure the unwary into a culture of indebtedness.
Tim Leunig, I suspect, went through higher education in the era of student grants.
“Student loans were introduced as a means of saving public money. The more paranoid among us, however, might conclude that the real reason was to lure the unwary into a culture of indebtedness.”
Given 70% of households are home owners and this figure is higher amongst graduates this seems something of a stretch.
Unless you are born super-rich and entirely risk-averse, endebtedness is somthing you will deal with in your lifetime and is entirely necessary given we need the benefits of things like decent homes and education well before we can afford to pay for them.
The argument over whether higher-education should be ‘free at the point of use’ or involve some payment rests on two things
– the balance of benefit from a degree to you individually and to society in general
– the cost/benefit of state intervetion versus the alternatives.
On the first point the fact student numbers are still rising and ex-students including myself can cope with the debt (which was about 10% of what I now owe on my mortgage but with much friendlier repayment terms), would suggest there is not a good social intervention case. The difficult issue is how fees impact attitudes amongst students from poorer backgrounds with a strong anti-debt culture. However to subsidse every student to make a marginal difference to a small minority is peverse and ineffective.
On the second point the Centre Forum released a very good paper two years ago that highlighted early years investment had a much greater impact on life-chances for children of the poor and vulnerable than tertiary education. There is a very good case to suggest we should be targeting our education budget to where it makes most difference to opportunity and inequality.
Such a case would struggle to suggest the greatest social injustice in education facing Britain today is that the group in society with the highest future earning potential should receive public subsidies today to avoid manageable debt tomorrow.
Angus said: Anyone thinking of taking out a personal loan needs to write out 500 times: “Borrowing money means I pay more in the long run. Personal loans are a complete rip-off.”
Um, Student Loans aren’t, if anything they’re a medium term way to make mony, interest rate is set at inflation level, and that’s normally significantly below rises in averege income.
Ergo, the value of the mony you’ve bothered stays at exactly the same level, and you don’t pay more in the long run in real terms.
My principle problem with the way campaigners against loans &c work is that they regularly get their facts so wrong that their arguments are easily dismissed or debunked; there are real, good reasons to oppose them, the overall debt level maybe one, but not in these terms.
Also? To destroy the system, bankruptcy after the fact is irrelevent, old means tested system could’ve been broken on introduction, new system not so easily.
“Given 70% of households are home owners and this figure is higher amongst graduates this seems something of a stretch.”
Loans secured against real property are substantially cheaper than personal loans. Mortgages are a necessary evil. Personal loans have no legitimate function. If you think you require one, you have a problem that needs sorting. Getting into debt with a bank isn’t the way to go about it.
I have met a number of people of late who have been ripped off by crooked banks selling them “personal loan insurance”. What the bank doesn’t tell you is that once the insurance company has paid the bank, it comes after you to recover. So you pay more without reducing your risk one jot! If a market stall holder tried this on, he’d be in jail.
MatGB: If the interest rate is set at inflation level, how does the bank make its dosh? Not public subsidy, surely?
Mass bankruptcy would teach the banks a lesson, but it would also harm the economy, shut down businesses and put people out of work. And we must bear in mind that the people who own banks never, ever suffer.
The only good thing about student loans is it acts as a deterrent to those who choose to sit round the bar all day and smoke pot.
I think Mat raises an interesting point, albeit indirectly, that there’s a large amount of confusion about the fees/loans system amongst the general public. As well as those students graduating with large debts, how many people either chose not to go to university/to do a certain course or go to a certain institution because of concerns about fees, loans and potential debts, but on the basis of a very limited understanding of the system?
Clearly from this thread there is a lot of confusion over debt, student and otherwise!
As a couple of people have remarked, student loan debt is usually at very low rates of interest. In fact, as a student you would be nuts not to take out a govt student loan, and nuts to pay it back early (even if you don’t need it, you can lend it back to the govt and make a guaranteed profit). Some bank loans to students are also at very advantageous rates.
In general, personal loans are a bad idea, but not always. I bought my first car with a loan, as I did not have the money, and having a car allowed me to take a better paid job. I paid it back over six months, at which point I had the car, and the job. That was a sensible thing to do.
Overall, there is no evidence that loans have deterred students from going to univ, nor that they are going to one univ vs another, or that they are doing one course rather than another. Indeed, given that the total number of places at each univ and even for each course are sort of pre-determined by govt, student loans v grants cannot lead to more than minute changes in the relative numbers at univ A vs B, or on course X vs Y.
Since they have little effect on behaviour, student loans (rather than grants) are in effect a way of transferring money from graduates, who are richer-than-average, to taxpayers as a whole. They are progressive, and should be supported by people who prefer to see govt take from the rich and give to the poor.
MatGB: If the interest rate is set at inflation level, how does the bank make its dosh? Not public subsidy, surely?
Um, YES.
That’s the whole point, the Student Loan Company was set up as a Govt clearing house, the loans are at cost, underwritten by the Govt and the interest rate is pegged to the reate of inflation.
This key point rather does invalidate pretty much every other point you’ve made on the topic I’m afraid, as the overwhelming amount of the debt that’s being discussed is just such a loan.
Tim: “student loans (rather than grants) are in effect a way of transferring money from graduates, who are richer-than-average, to taxpayers as a whole. They are progressive,”
I’d rather see a high threshold flat tax replace the lot, but you do make a good point, however the principle worry is that the people least likely to go to University anyway are now even less likely to consider it due to (wht we agree is spurious) fear of ‘debt’.
It’s just a damn shame that the media, NUS, news sources and applicant advice sites all bang on about it in emotive, scaremongering terms rather than cover the actual facts.
(If the NUS had actually bothered to read the rules surrounding fees, they could’ve killed them dead, but no, they had to go on about grants not fees instead)
Give the Govt credit, the current system of loans is better than the old loans introduced by the Tories, and with the bursaries makes poorer students better off, but, well, let’s not worry too much about facts shall we?
“This key point rather does invalidate pretty much every other point you’ve made on the topic I’m afraid, as the overwhelming amount of the debt that’s being discussed is just such a loan.”
It doesn’t, actually.
The loan still has to be repaid. This might be easy for most students, but not for the minority who drop out, fail their exams, become ill or incapacitated, or are unemployable because they belong to an unpopular ethnic minority or employers simply don’t like them.
Students in this residual category will have to make themselves bankrupt, as that is the only sure way of chasing off creditors. From the declaration of bankrupty onwards, not a farthing more is paid (generally). On to whom is the loss offloaded? Why, the suckers who take out personal loans, of course!
Graduate unemployment and underemployment are highest among blacks, and those of Pakistani and Bangladeshi heritage. This is because few private sector employers will even countenance taking on staff from these groups except in the most menial capacities. £6.00ph as a security guard or shelf-stacker is insufficient to pay off a student loan.
So I think we see what the problem is. Aspirants from Esher, Sevenoaks or Beaconsfield, educated at public schools and with wealthy parents, will be undeterred. Those from other, less fortunate backgrounds, might be.
Then there is the question as to whether the expansion of higher education is actually that great an idea. Are we bringing too many people into further education who are not intelligent enough to benefit from it? Are we in fact devaluing university education? My father, a university lecturer for much of his life, certainly considered that to be the case.
In the days of Charlie Clarke, Sue Slipman and Trevor Phillips, the NUS was in favour of full grants for all students (no parental means-test). As far as I can recall, no student grouping of any colour dissented from that. “An education is a right, not a privilege” was the sloagan.
Tim didn’t need a personal loan to buy a car. He could have purchased an old banger for £500. By the time it gave up the ghost he would have had his new job for a year and would have raised the £5,000 to acquire something more respectable.
Angus is dead right: the question of whether people from poorer backgrounds are put off from applying to univ is an important one, and there is no evidence that they are!
If we had too many graduates, then the graduate premium would disappear. It hasn’t, and we don’t.
Students who are ill, unemployed etc do not pay back their student loan – ever! You pay only if you earn over £15,000. If you earn £19k, you pay £1 a day. Hardly the end of the world.
Angus is right: I could have kept the Fiat Uno. But driving round the M25 in a car with no airbag and no ABS was risky. The interest for the car loan totalled about £150 – money I am glad I spent. Surely as liberals we all agree that it is for me to decide whether I want to spend £150 of my money to drive a safer car now rather than later? And I don’t recall Angus declining a lift in it 🙂
Angus: The loan still has to be repaid. This might be easy for most students, but not for the minority who drop out, fail their exams, become ill or incapacitated, or are unemployable because they belong to an unpopular ethnic minority or employers simply don’t like them.
Ah, no. It becomes repayable only once you start earning above £15K, at a rate of 9% of earning above £15K in the same way as a tax. If you never earn enough money to pay it back, then you don’t repay, if you hit a certain age (I believe it to be 55) then it’s written off.
So, um, invalid point, again. Sorry mate.
£6.00ph as a security guard or shelf-stacker is insufficient to pay off a student loan.
Which is why they wouldn’t need to.
Your other points, about too many students rather than apprenticeships &c are points I will agree with, although a lot of ‘unversity students’ that count to the stats are doing other courses, that’s deliberate policy, when they talk of the 50% target, they’re including vocational courses, HNDs(or whatever they’re called this year) and similar.