Crippling Ourselves Financially to get an Education (Student Debt)

Member Name: Deetcm

Product:	Student Debt
Date:	09/11/08 (191 review reads)
Rating:

Advantages: An opportunity to consider alternative pathways.

Disadvantages: Being saddled with debt.

I was fortunate enough to be part of the last cohort of students that qualified for an educational grant. However, I still had to get a part-time job and apply for a government loan from the Student Loans Company. Despite all of this, I ended up transferring universities so that I could live at home as I was sick to death of eating a combination of cereal, bread or noodles: Financially I couldn't afford to stretch my budget to anything else.

At present, the maximum tuition fee that a Higher Education institution can charge a student for the academic year 2008 and 2009 is £3,145 for a year's programme. In the event that a student does not live at home during that period they are likely to take on a student maintenance loan to cover the cost of living and educational resources such as text books.

For the purpose of this review, let's assume that the typical student who takes on a maintenance loan is living away from home but not living in London. This means that the student is eligible to receive £4,280 this academic year. If rates remained the same over a three-year period that would mean the financial cost of graduating as a Bachelor of Science or of Arts would cost the typical student a staggering £22,275.

So, how is a person saddled with this level of debt expected to pay it back? Nowadays, student loans are income contingent which means that the amount repaid is dependent on the amount of money earned. Once employed and earning over £15,000 gross per annum, repayments will automatically be deducted from a person's wage.

This year, the repayment rate is 9% of anything over £15,000 - that means it could take a person earning a small amount over the threshold well over a decade to settle their debt in its full entirety. What a frightening prospect. It is possible to reduce the repayment period by making additional voluntary contributions to the loan account, but I doubt many newly graduated Bachelors are in a position to do this.

If it is the case that the loan holder took their loan after August 2007 and has been making repayments for 35 years, or is over the age of 65, or dies, or becomes disabled and unfit for work, then the loan and any interest is cancelled: How kind and considerate! Why should it take 35 years of repayments before they cancel the debt? Why is it not done sooner?

The idea that education is not free is a bone that I constantly pick - particularly as I am a teacher and I see first-hand how education can open doors for people and how it can be used to give people the opportunity to remove themselves from potentially destructive home lives. What I often ask myself is what has the government done with the money they once invested in higher education? Have they used it to improve primary and secondary education? Have they used it to noticeably improve the services offered by the NHS or even public transportation? These are rhetorical questions - answers are not needed.

While it is fair to say that I do not dissuade students from going into higher education, I do encourage students to seriously consider alternative pathways which will take them to their desired career goals. For example, many students wish to pursue a career in accountancy, so rather than taking the traditional route and heaping debt upon themselves, I recommend enrolling for ACCA qualifications which they can take whilst in paid employment.

Taking this pathway will get them world renown qualifications but at a fraction of the cost. More importantly it will get them a competitive edge - experience. Having industry specific experience will make them more attractive to potential employers. A significant proportion of Bachelors are unable to get a job in their chosen field as the labour market is saturated with many applicants competing for a few jobs.

As educational facilitators, I think we have a responsibility to present students with these sorts of possibilities rather than insist on providing blanket suggestions of higher education pathways through university.

Summary: Is university really the only way to achieve a career aim?