The student loan reform: an insult to opportunity

For most of us, student loans are the only money that we have ever borrowed, and the large financial commitment that is headed towards us can often seem daunting. With the Government tightening its purse strings on student loans this September, there is one question playing on everyone’s mind: what price must be paid for a decent education, and more importantly for opportunities in general?

Earlier this February, the Government announced startling changes to student finance in England. The most controversial of these included decreasing the loan repayment threshold from £27’295 to £25’000 and increasing the repayment time from 30 years to 40 years for those starting university in 2023.  Experts have stated that this move marks a reform of the student loan scheme into a ‘graduate contribution system’, with MSE founder Martin Lewis commenting that it ‘effectively completes the transformation of student loans, for most, into a working-life-long graduate tax’.

The move has understandably sparked outrage, with most graduates being set to pay off much more of their debt if the scheme goes ahead. While currently only around a quarter of graduates actually pay off their debt in full, the new scheme would see this number rise to over 50%. Meanwhile, the Government’s commitments will shrink in comparison, with them expecting to pay 19p per £1 of debt compared to the 44p they pay presently.

This surrender of welfare responsibilities comes in stark contrast to many other European countries’ higher education policies. In Germany, for instance, higher education is free regardless of citizenship, while Denmark’s Statens Uddannelsesstotte Progamme takes it one step further by paying students to attend university. This begs the question of whether we’re heading in the wrong direction- while more and more countries are viewing higher education opportunities as a human right, the UK Government seems determined to maintain that they are a privilege.

Indeed, privilege is as present as ever within the new reform. Similar to many of its other recent anti-welfare schemes, the Government’s approach seems short-sighted in its anticipation of the inequality it creates.  Lower to middle-earning graduates will be harmed the most:  while they won’t clear their debt, they now face paying for another 10 additional years, over which their interest will only grow. This contrasts to high income graduates who will clear their debt long before it wipes; alongside their much earlier start-date, they now also benefit from a lower net interest. High income graduates are also the main beneficiaries of the more popular reform that is interest rates being cut to RPI inflation. As the only individuals likely to repay their loans and accumulative interest in full, they now face a much smaller repayment than that of previous graduates. With the price of gaining a good education now steeper and more inequal than ever, it appears young people face a less and less opportunistic future.

Considering Liz Truss’ recent tax cut plan that has sent the pound crashing, the student loan reform may appear to be one of the more trivial matters of today’s economic climate. However, in reality it is yet another sign of welfare cuts destroying young people’s prospects. Whether its our right to public transport, our right to housing or our right to education, the Government seems intent to ignore us when deciding the consequences of their economic policies. The student loan reform is yet another example of the increasing price we pay for basic public resources, reflecting another alarming step towards the removal of opportunities for young people in the UK.

Image: Emily Ranquist on Pexels

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