its sums wrong. Again!
Various people are taking the opportunity to say “We told you so”.
Lib Dem heads are spinning round even faster than normal as they realise they were right and then
they cast aside what was for them a rare example of common sense and instead jumped on the Tory
bandwagon in the name of political expediency.
The reason for all of this?
A few years ago University fees went from a maximum of £3000 all the way up to £9000. As anyone
who lived in the real world had expected Universities almost immediately put their fees up and most
went straight to the new maximum. Politicians caught by surprise yet again came out with all sorts
of comments about how the system would bring in up to one Billion pounds more in income and that
there were repayment safeguards in place to protect the students.
Well it seems the students in question have either decided to make their own safeguard by skipping or
have found themselves trying to find jobs at a time when that £21,000 level where repayments on the
fees starts off seems to be very far away.
So almost half of all student loans are being defaulted on, 45% to be accurate. It seems that the cost of
administering the system of student loans is so complex that it costs 52% of the total cost to run
meaning that only 48% is put back into the system for future students.
Given the rapid rise of the default rate this means that this time next year the student loans system will
in fact cost more to run that it can ever get back from students repaying their loans.
The dream of half of all students going to University was a wonderful glowing image, instead of all those
hard done by youngsters languishing on the dole they could be in full time education learning the sort
of things that would guarantee them good jobs and good wages.
We suddenly had an explosion in the number of places calling themselves Universities, a number of
new courses to satisfy demand and more and more students being encouraged to take the loans and
Now we find ourselves in a situation where wages are frozen or limited to at most 1% increases, the cost
of living is going up faster than wages and the economic situation has dropped the wages being offered
All those graduates are coming into the job market, no experience, degrees in subjects that are often
laughed at and competing for jobs at the minimum wage level.
We have our senior politicians talking about permanent austerity, we have various experts telling us the
economy is getting better, isn’t getting better, is vulnerable to shocks, can fail again, is more robust than
ever, its a smoke screen, we are getting better faster than anyone else in Europe.
Take your pick as to which you believe or take a look in your local paper and read the jobs page.
Teachers, carers, anything else, look at the wages offered. Are you inspired?
To give you an idea of what things are like out there I have just started another training course, yes I
know, more training. Anyway it’s a professional qualification in Adult education because I keep being
told I need a bit of paper to teach people the things that I have learned over 30+ years in my various
Our teacher has a Doctorate in Education, she teaches as a part time job in the evenings.
Aside from myself we have a lady with a bachelors in Civil engineering and a second in Engineering
Management, since she is having difficulty finding jobs she is being advised to move into education to
train all those female engineers that people say are so desperately needed.
We have a lady with a doctorate in Psychology who is also looking to move into education due to
limited opportunities in the private sector.
We have a chap who has his degree in mechanical engineering and logistics who is training on the job,
he just started working teaching automotive theory and practise.
We have a lady who has been teaching English for the last ten years abroad, she is fully qualified to
teach English as a second language but cannot get work in the UK without a bit of paper that says
she is qualified, International schools don’t count apparently.
We have two degrees in Photography, one maths, two hair technicians, one in textiles. A man who
is a professional technical fleet coordinator with post crash examination qualifications (I was taking
notes but his entire job title was very long and very fast so this is not all of it) and last but not least a
All looking to expand the training they have or to retrain into something new.
Half of this class is young, the other half heading more towards my age. But both age groups have similar
problems. Both are trying to improve their work prospects, both are looking at steadily falling spendable
money and both are trying to cope with large debts.
One group have mortgages, the other have university fees.
Rather than the traditional route of sharing rent till you got a job that paid enough for your first
mortgage we have young men and women leaving University and entering the real world with
debts of anywhere from£18,000 to £40,000+ for the multiyear professional types who went for
Bachelors or Doctorates.
From the very start of their lives these young men and women have a huge debt hanging over them.
But you say they don’t have to repay it until they are earning over £21,000 and then it is a small
percentage of income over that.
Have you noticed the caring and compassionate government we have, or the fact that Labour
who are the alternatives also got the sums for this wrong.
Years ago it was thought that all these graduates would stroll into £21k jobs easily.
Now many will take years before they see that sort of wage and some never will, there are not
that many hairdressers earning over £21,000 outside of London. Plus even when they reach that
magic number and start paying back it is over a decade before it is repaid and given that they
pay interest on the outstanding amount as soon as they hit the payback wage most are going
to be looking at 15+ years paying it back.
Add that on top of the number of years it will be before many of these new graduates reach £21k
and these young men and women could easily not clear this debt until they are in their forties.
Many will never repay all of the debt; many others have vanished, left the country, moved or just
dropped off the radar.
In as little as a year the system will start costing more to run that it will reclaim from the students.
So now what? The government has several options:
Write the whole thing off, ignore the defaulters and just keep funding it. This will encourage a
massive increase in non payments; after all why work to repay a debt that the government is simply
writing off like so many other hugely expensive government failures.
Spend yet more money to chase the defaulters. This is commonly called throwing good money
after bad since many defaulters are outside the UK.
Look at the fact that over half of the cost of the entire system is in running the system and find some
alternatives that do not punish the students or require such a huge and costly bureaucracy.
Or perhaps the most unpleasant option of all, the government can redo its sums and decide that
since all of these graduates are getting jobs that earn a lot less than £21k they should drop the
minimum to say £18k before repayments are required.
This last option would mean that in addition to entering the real world facing low wages, a high
cost of living and a significant debt hanging over them the graduates would also face having to
start repaying the debt as soon as they start to earn a modest wage.
This will, in my opinion, lead to more and more defaults and less and less money reclaimed.
The one thing I do not expect to see is this government or indeed any government admit that it
made a mistake and try to sort it out in a way that does not impact the students and graduates
that we need to take us deeper into the 21st century.
It would be nice to see a grown up consideration about this.
It would be nice to have Universities producing the kind of men and women that can take UK
businesses back to the technological forefront without having them spend the first half of their
careers in debt.
It would be nice that full time education was for the sake of learning and producing scientists,
engineers, doctors and nurses, thinkers, creators and builders of the future rather than seeing
it as a way to get hundreds of thousands of youngsters off the unemployed lists.
It would be nice if we started treating university graduates as an asset by focusing more on the
sciences and less on hairdressing and fashion and media studies.
Maybe I will be pleasantly surprised. I will not be holding my breath.