'Student loans aren't a debt – change the name to avert a...' blog discussion 20 September 2012 at 11:10AM in Martin's blogs & appearances & MoneySavingExpert in the news 25 replies 5.3K views

Former_MSE_Helen

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Student loans aren't a debt – change the name to avert a national tragedy" Blog.

Please click 'post reply' to discuss below.

KeithBN

This whole article is pure spin of the sort one expects from politicians not from MSE!
The fact of the matter is that this loan IS a debt. Yes, it has some pretty unique repayment options (only repay if you earn enough, debt written off after 30 years) but the fact remains that is IS debt, nothing more.
The spin in this article is highly disappointing coming from Martin, of whom I expected better.
The student loan IS a debt. Spin does not make the debt go away.

The more sensible option is to scrap the whole thing, go back to grants, and realise that the investment is amply repaid over the graduate's lifetime in the form of higher taxation paid as a result of them earning a higher salary through their degree.

All the student loan does is land people with massive debt upon graduation, and cost far too much money to administer.

Zelazny

KeithBN wrote: »

The more sensible option is to scrap the whole thing, go back to grants, and realise that the investment is amply repaid over the graduate's lifetime in the form of higher taxation paid as a result of them earning a higher salary through their degree.

I agree regarding spin, but have to take issue with the above. Previous governments have tried to encourage as many people as possible to go to Uni to get degrees because they think that will lead to higher salaries and higher taxes paid. The thing is that there's only so many jobs for people with degrees, and now people with degrees are having trouble getting the jobs that 5-10 years ago would not have needed a degree at all.

Part of the intent of the new student loan is to make people think about whether they really need that degree, or if they'd be better off going out and getting a job. We want less people to have degrees, so that those that do have them are valued more.

tl;dr: if everyone has a degree, then it has no value.

Rafter

Interesting take on it - think I agree more with Martin than with you Keith sorry.

Either we carried on with grants and have to increase general tax for everyone - including those who didn't go to university or who had parental support. Or we have this contribution system where those who benefit most, contribute the most.

Ultimately it boils down to the politicians dilemma. It is easy to make promises to the current electorate (cutting taxes, increasing higher education places) until you realise you have created a enormous bill to be picked up by a future generation.

What this country really needs is a set of principles in some sort of constitution that prevent politicians from making these kind of unfunded promises that get them elected but lead to recessions and cuts in future years or charges for services that were previously free.

R.

VT82

Keith, you have not provided any evidence to back up your argument. Just because you say it is a debt, it doesn't make it a debt. It's a hybrid, which is where the words used to describe it in a short phrase, rather than always having to describe it in full, can make a difference to how people interpret it.

I'm a Thatcherite, and a nit-picker, but I fully agree with Martin on this one.

Errata

A rose by any other name would smell as sweet. A student debt by any other name is still a debt, however it is paid - or not paid.

zerog

It's a graduate tax with an upper payment limit. As Martin says, it's only a debt if you consider all tax to be a debt.

alinwales

if 17yo kids can't get their head around what it is and what it isn't then perhaps university isn't for them?
(plus the education system is failing them?)

1jacks64

I got a 2:2 in BA (hons) Business Management which I got in 2004. I still owe the SLC £10,000.00. I am still at square one not earning more than others who didn't do a degree. The problem is the Government are telling people to go to university when there are not the jobs available at the end of the course. It has been like this for years even before the 2008 financial crisis hit.

It appears to me that for the last 20 years the Government has had this stupid policy of allowing British jobs to go overseas to places such as India and China. In order to prevent embarrassing unemployment figures the Government just tells people to stay at school for as long as possible. So in response for the last 20 years the Government has been telling people to go to university. When I have been to job interviews and tell employers I have a degree they do not seem interested. The Government is using Universities to train people up for jobs that simply do not exist. It is a waste of UK taxpayers and students money.

I feel that I have wasted my time and my money doing a degree. Young people such as myself have been sold a pup. There are several stories in the media of those who have completed a university degree and are working in pubs, bars supermarkets etc because there are no jobs requiring the degree they have completed. This University thing that the Government is peddling is the biggest red herring ever. The best thing the Government could do is spend taxpayer funds on training people up for jobs that actually exist and also work on bringing the jobs back to Great Britain that have been outsourced overseas. The problem we have isn't a shortage of graduates but a shortage of jobs. When are the Government going to get their act together ?

Martin's blog states that you only start to repay the loan when you are earning over £21,000.00. Since when was £21K a big wage! I would have thought you shouldn't have to repay anything until you are earning at least £30,000.00. That would be far more sensible. I also think that it is a high rate of tax to be paying 20% + 9% = 29% income tax with NI on top.

It is irrelevant what this debt is called just focus on what I have outlined above to get things moving in the right direction. Question is when are the politicians going to wake up and get on with it ?

Torry_Quine

Of course its a debt whatever you call it. Yes not everyone pays as you have to earn a decent amount but that doesn't change what it is.

Errata

I think 1jacks64 sums the situation up very well. People have been sold a pup, and anyone who thinks that the money advanced by the government to students to pay their university fees can be classed as anything other than indebtidness is merely playing with smoke and mirrors.
Perhaps it's in the interests of university governors, of which Martin Lewis is one, to encourage people to attend university, whatever the cost to the students may be.