Student loans are meant to shift the cost of higher education from the state to individuals, but it has become increasingly clear that they are failing to do so. The New Statesman reports.
Up to 45 per cent of the value of student loans will never be paid back according to an OECD report on education released this month, which means that the government can expect to make a loss of £6.75bn on the £15bn paid to students this year.
“The government at the moment has benefitted from an accounting trick,” Andrew McGettigan, author of The Great University Gamble: Money, Markets and the Future of Higher Education tells the New Statesman. “It can issue £15bn of loans this year and it doesn’t have to declare it as expenditure. It only has to declare expenditure when it writes off these loans in 30 years’ time.”
With the current outstanding balance owed by students topping £100bn, it raises the question why have students have been lumped with such ridiculous loans when the government will be covering the cost of so many of them anyway?
Amatey Doku, vice president of the NUS describes it as “fiscal illusions created by a system that makes loans a form of magic money for the Treasury” and calls for a “complete overhaul” of the funding system.
McGettigan says: “It has policy implications, if you change the way you account for student loans other policies become politically feasible. For example, it becomes much more feasible to abolish tuition fees because the comparative benefits of tuition fee loans over grants to universities will no longer look quite so different. If you change the conventions, policies that were previously off the table because they looked too expensive are suddenly back on the table.”
Please tell us your thoughts in comments or via Twitter ~ Tamsin
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