Opinion

The Unspoken Future of your Student Debt

In July this year, the Student Loans Company (SLC) redesigned its website. In a seemingly innocuous statement, the quango announced that it had moved its web address from SLC.co.uk to gov.uk, and that it had added a new ‘online repayment service.’

Cue the yawns.

But Martin Lewis screamed bloody murder. Branding the new features “irresponsible and dangerous” the consumer finance expert accused the SLC of attempting to intimidate graduates into unnecessary repayments. Suddenly this seemingly innocuous statement was front page news.

And it’s easy to see why. The new website places a nominal ‘debt’ figure front and centre, obscuring the fact that for 83% of university leavers, making additional repayments is simply flushing away their hard-earned cash. Only those earning spectacular sums stand to benefit.

The SLC had been caught off guard. Issuing a hurried response, they assured onlookers that “the new service allows customers to access further information and guidance”. Tellingly, the response failed to mention the discreet adding of a warning text prior to repayments being made. They’d been caught red-handed, and they knew it.

Perhaps this is where the buck stops. The SLC had slyly attempted to extort unsuspecting graduates, but they’d been caught in the act and had backed down. Problem solved. Indicative of a government starved for cash and resorting to unsporting methods to source it, but nothing more sinister.  

If only.

Across the Pond:

The United States is facing a crisis of student debt. The nation’s students owe an eye-watering $1.6 trillion to the federal government and various private lenders, amounting to 8% of GDP. What’s more, over 1/3 of severely delinquent debt in America is owed by graduates. The system is creaking at the hinges.

It hasn’t always been this way. In 1996, the average American student owed only $12,750. Yet by 2017, the figure had almost tripled, according to research by Yale University. Those who default see their social security payments siphoned, and their retirement income shattered. Graduates are trapped in a punitive system designed to marketize the education of the next generation.

The numbers matter. In the same period, the proportion of US twenty-somethings who were financially independent dropped by 20%. Rates of home ownership, business creation and consumer spending are all squashed under a burgeoning mass of debt. And in a desperate attempt to scrape away at it, graduates flock to slave away at corporate desks. Some even declare bankruptcy. Shackled by insecurity, America’s youth have had their futures throttled.

This burden has not fallen equally. The Washington-based think tank the Brookings Institution found that African American students owe on average $7,400 more than their white counterparts. With no caps on tuition fees, prices for Ivy League courses reach the staggering heights of $65,875 at Harvard Law School. A top education is increasingly the preserve of the moneyed elite.

But we’re not heading there, surely? British student loans are tightly regulated and collected by a non-profit, not the high street banks. Besides, there’s no political will for such a drastic marketisation of higher education, let alone any precedent.

Whispers of the Future:

Yet there are worrying signs.

The government have been chipping away at Britain’s education system for years. From slashing funding through austerity to blindsiding lecturers with pension reform, they have shown little but contempt since gaining office in 2010. Nothing quite captured it up better than the decision to open pubs before schools. That classrooms stand empty whilst pub-goers revel is a national disgrace. But it is an entirely predictable consequence of the government’s deep-rooted disdain of intellectualism. We’ve had enough of experts, remember?  

Higher education will not be spared. Education Secretary Gavin Williamson scrapped the Blair government’s longstanding target of sending 50% of English young people to university, just after it was reached in early July. In attempting to justify the move, Universities Minister Michelle Donelan stoked fears of the “dumbing down” of academia, accusing providers of offering “low value” courses. We are witnessing a full-throttled assault on access to higher education.

And this is just the beginning. The 2019 Augar Review, despite peppering the headlines with promises of fee reductions and funding for vocational training, contains the blueprints for a full-scale privatisation of British universities and student debt. Advocating caps on student numbers and lamenting an “oversupply” of graduates, the report belabours the need to secure value for taxpayers. To do so, it measures the ‘value added’ to students’ future salaries by their courses.

The message is simple. If graduates work for charities rather than banks, their degrees were “low value”.

The seeds of marketisation have already been sown. They’re in the very language the SLC uses. A quick perusal of their website whisks you through their “customer communications and marketing” and “corporate information” pages. Terms utterly foreign to a Whitehall quango, but entirely familiar in a boardroom. What’s more, the company’s “CEO” and “Deputy CEO” are not civil servants, but a former consultant and investment banker. The threat of privatisation is nothing new.

But it doesn’t stop there. As early as 2013, the SLC began selling off student debt to the private sector. Investment banks, not public services, would benefit from the repayments. And don’t think they got a good deal. Former Universities Minister (and soon to be Sir) Jo Johnson lost a staggering £800 million in the 2017 sale of £12 billion worth of student loans. The process has been as farcical as it has been damaging.

Students have already begun to face the consequences. Despite assurances that the terms and conditions of loans would be left unchanged by the sale, the ‘customs and practices’ with which repayments were managed changed abruptly. Graduates began reporting payments being taken by Erudio, the firm to which the first batch of loans were sold, despite their earning below the repayment threshold. With the Augar Review recommending an extended repayment period of 40 years, Johnson’s promise is ringing emptier by the year. It will only get worse from here.

Yet another in the line of hollow promises made to Britain’s long-suffering student population.

A Little Statement:

The UK’s student debt crisis has been simmering for years. Creeping upon us just steadily enough that no cohort can fully confront it. For as soon as they comprehend the scale of what they face, they are tossed out into the world of repayment – a Kafkaesque purgatory in which the simplest option is to sit back and forget.

Britain is not the United States. Not yet. But it is striking quite how much an innocuous little statement can reveal about just how far we have come.

Not so innocuous anymore.