Graduation is a day to rejoice and celebrate the hard work you have put in to earn that degree. However, it is also the day people realise that the university student-bubble has burst, as people come to terms with their future plans, responsibilities, income-generation and giving back to the government through taxes and especially, repayment of student loans.
The topic of student loans has always been up for debate at Parliament. Given the fee increases for national and international students in the last decade, it is no surprise as to why we have seen frequent protesting regarding this subject. Some say education in the U.K. should be free and should follow the system of countries in Europe, particularly Germany, who provide education free of cost.
However, it was reported in the FT over the summer that UK’s student loan debt has risen by almost 20% to over £86 billion, as the first cohort of students who paid the new £9000 fees were set to graduate with an average debt burden of over £50,000, which could, according to the IFS, lead to these students still repaying their debt well into their 50’s.
The problem with the student loan debt crisis is not how many students are taking loans from the government but rather how many of them are failing to pay back those loans. Furthermore, new statistics show that the supply of educated graduates in the market do not meet the demand set by employers and that a third of graduates are failing to find graduate-level employment even five years after leaving university, according to the Independent.
It was also reported by IBtimes that University graduates in the U.K. owe more in student loans than Americans do and therefore, politicians, universities and student bodies alike need to come together to address this ‘debt bubble’ before it bursts and changes the opportunities that students have to obtain a loan.
The only silver lining in the middle of this debt crisis is that interest rates in the U.K. have been particularly low and in response to Brexit, the Bank of England have reduced the rates further which may benefit students up until the point that universities decide to raise the fees again, which according to the grapevine, is imminent.
In addition, regulation needs to be toughened on certain issues and policymakers should crackdown on graduates who have taken student loans and who eventually move abroad for work after graduation, thereby evading the loans that they owe to the U.K. government.
These issues that governments, tax payers and students face brings many questions to mind, which the House of Parliament should look to discuss. Some of these include whether the cost ceiling should be reduced from £9000/ year. Others argue that education is a basic need and should be offered for free, which would essentially transfer the burden to the government and taxpayers and finally, some may consider whether university education is really that important at all.
Nonetheless, the current fees and funding system is unsustainable and this issue needs to be looked at carefully as Brexit negotiations begin and before we discover another bubble that is likely to burst.