Unpopular but rational viewpoint alert!

Happy New Year and all that! Here’s a guest blog post from Kenny Parsons, which I meant to put here in 2010, but as time is fluid and today’s really just another day made special by our imposition of order on the sun’s habits, I suppose there’s no harm in posting this now.

Kenny and I went to university together – three fun-filled years in Leeds that were based around drink offers, organising club nights so we could get in for free, and splitting £3 Lucky’s pizzas at 4am with grown ups in black eyeliner.  We started our degrees just before the idea of top-up fees came around, and have probably-almost-notreally wormed our way out of the era of student poverty and into Proper Adulthood.  I tell you this because Kenny has written some fairly eloquent words about why some members of the Youth of Today may not have been entirely justified in their opinions a few weeks ago.  We’re not talking about the rioters here, but the general opposition to and outrage at the fee hike.  I tell you this because Kenny’s point doesn’t come from the mouth of the toff-nosed elite (I mean, he’s from the north, for Christ’s sake), but from someone with a very fresh memory of the student experience.

Henceforth be his words.

So it’s now going to cost everyone up to £9,000 per year to go to University. Nobody denies that this represents the phenomenon known as “bad times” – in an ideal world higher education would be completely free. In Scandinavia, it generally is. But there are more people live in Britain than there are in all the Scandinavian countries put together, on a much smaller landmass and crucially we don’t get our faces taxed off like our Viking brethren do. To be fair, they probably spend more at university, as the equivalent of our beloved Otley Run would cost about £600.

As stated, ideally higher education would be free, along with every other public service, but since everyone is going to university right now (and the country is broke, borrowing money to repay the interest on money we’ve borrowed) that isn’t likely anytime soon. Since “massive increase in taxes to pay for people who aren’t your kids to go to uni, get drunk and then earn a shedload of cash or do nothing at all afterwards” probably isn’t the easiest thing for Cameron and chums to put to Joe Public, they’ve instead decided to allow universities to charge up to £9,000 per year for access to their hallowed halls (which, of course, they all will; no university wants to be seen as the Aldi of higher education). Since everything else in the country is being cut with the exception of the health service and foreign aid (which is a drop in the ocean anyway) it’s unrealistic, naïve fantasy economics to think that higher education should somehow be magically immune. So we have a situation where we have two choices: students pay more in fees, or we have chronically underfunded, under resourced and ultimately poor quality institutions.

Bastards! I hear you cry. Quite understandably this has triggered something of an aggressive reaction from the country’s student/potential student population, who feel that there future is being snatched away by a load of (mostly) blokes who, after all, benefited from the free education they now seek to deny to others. But surely there’s more to the Government’s claims that this is a progressive move than just a load of old nonsense and sly Tory moves to keep the oiks in their place?

Well, actually, if you read the finer details of the proposal (something which almost everyone seems to have inexplicably failed to do) then yes, there is.

I should explain at this point that as a graduate who earns enough to make student loan repayments, I do feel I’m qualified to speak on this subject. The one thing that I have noticed about my student debt since graduating from University is that it makes absolutely no difference to my life whatsoever.

Just in case you didn’t read that fully, student debt has no effect at all on your post-university life other than a laughably small repayment each month.

At present, I earn around £18,000 per year, excluding bonuses, sales incentives, benefits and whatnot. This makes my take-home pay just over £1,100 per month. I pay back around £40-45 per month of my student debt, despite the fact that my debt is in excess of £12,000. My repayment of £45 wouldn’t change even if my debt was £120,000 as it is based on my salary, not the size of my debt. As I’ll generally spend more than my monthly repayment over the course of a Friday and Saturday night, I think it can be agreed that student debt is not crippling my finances (that’s the fault of excessive late nights and the presence of 24 hour Co Op and El Faro Pizza nearby, but such debauchery has no place here).

What’s more important, and what a lot of people don’t seem to recognise is the lack of implication student debt has on my ability to gain access to credit and other services. If I applied for a credit card, bank loan or mortgage or anything else that would normally be negatively affected by high levels of debt, my income and other circumstances would be taken into account, but student debt would not be among these factors. This is the crux of the misunderstanding; people have seen £27,000 of debt over a three year BA/BSc and understandably worried that they would be crippled for life with such a mountain of debt. This is not the case. If you were to borrow the money from a bank with a commercial interest rate and strict schedule of repayments, you would be truly rogered unless you had a very secure income and could afford regular repayments, which sadly isn’t always the case for graduates in the present climate. When you consider that the rate of repayment is so low and there are no implications for you if you fail to secure enough income to make the repayments in the first place, suddenly the whole thing seems a lot more benign.

So, we’ve established that student debt isn’t an albatross around one’s neck, and that it won’t prevent you from doing anything, at all, ever. Nor does it have to be repayed, unless you have the means to do so, and even then it is repayed at an almost comical rate. Now that we’ve established that basically principle, we can move to looking at what Cameron and his faithful hound Clegg have proposed.

The Government proposes to loan students the money to pay tuition fees (ie. Nobody has to turn up to their first lecture with £9k in a brown paper bag). Graduates earning about £21,000 per year would pay back 9% of all the monies they earned above this amount per year. So essentially, the first £21k is repayment free. This is where we delve into the cold, scary world of mathematics:

Suppose you earn a pretty average UK salary of £26,000 per year (if so, where do you work, and are there vacancies?) From April 2011, that equals £2,166.67 gross pay, or £1,672.30 per month net take home pay, after tax.

You would pay student loan repayments of 9% on £5,000 of this income. That’s £450 per year, or £37.50 per month. Since you make your repayments before tax, that means that every month you’ll be paying back 1.73% of your income in student loan repayments. Which, let’s be fair, doesn’t really warrant throwing fire extinguishers at policemen from the tops of large buildings.

So there you are, earning your £26,000 per year and living your life, paying back your 1.73% per month and not being crippled by student debt which isn’t stopping you buying a house, affecting your credit rating or generally harming you in any way. Admittedly, there is a pride issue with being in debt, and it’s to be avoided where possible. If a friend let you borrow some money and told you not to worry about repayment, you’d likely feel a bit guilty and repay them anyway. Now, if it’s the Government, whom you don’t like, lending you money, for something that you think you should get for free anyway, and won’t have to pay back unless you have the means to do so and even then at a rate which you’ll barely notice (I had to look up my pay slips to find out how much I repay) then what’s the issue?

So. To summarise. Tuition fees increasing to £9,000 per year is bad. But for you, the student, it isn’t the end of the world. Sure, you’ll be saddled with a debt that you’ll likely never repay, or certainly won’t repay for many years to come. But then that’s fine because you don’t have to. Nobody is going to come round, rob your washing machine and flog it at auction because you haven’t been fortunate enough to secure a £20k+ job. Student debt is about as much of a non-debt as you can get, because nobody is going to make you pay it back and it won’t stop you doing anything at all until 30 years later, when its written off. Unless, of course, you earn enough to pay back an amount so small you won’t notice it, eventually clearing a debt you had forgotten was there, so little impact had it made on your life, which has been enriched by a higher education you’d barely noticed you were paying for.

I await my lynching/assault with socialist rhetoric. Before that however, a word for Nick Clegg. Despite everything I’ve said in this note, you still suck. You recently said that you’ve changed your mind on fees as “we have to move from being a party of protest, to a party of government.” Which is tantamount to saying “we never thought we had a chance of winning, so we just made up any old sensational nonsense, and then suddenly had to back it up.” Regardless of what anyone thinks of your policy, you deserve to be voted down because you said you’d do one thing, got voted in largely because of it and then did the complete opposite. Shame on you.

KP 9/12/2010

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