FOOL'S EYE VIEW
High Hopes For Student Debts

By Jane Mack (TMFJane)
October 22, 2001

Twenty years ago one person in eight went to university. Now it's one in three. It's obviously a good thing that more and more people are getting access to Higher Education but, as we all know, the method of financing it has changed out of all recognition in recent years.

The days of free tuition and maintenance grants disappeared about four years ago. Means-testing was introduced for the former and the latter was replaced by a series of loans which had to be paid back when graduates started work.

Nowadays, the vast majority of students receive no help with their living costs and about half have to pay something towards their tuition fees. And those who are eligible for hardship loans or bursaries find the system so complicated to navigate that they don't always get what they're entitled to.

In spite of claims by student unions that the Government's decision four years ago would lead to a reduction in student numbers, a record 323,410 students started their first year at university earlier this month.

But, depending on which surveys you read, graduates now leave university with average debts of around £6,000 while some start their careers as much as £14,000 in the red. Most of these debts will be made up of low interest student loans but, as they have to start paying them back the moment they're earning more than £10,000, graduates often face a life of near-penury long after they've left university.

A recent report from the National Institute of Economic and Social Research has also revealed that more and more students are being forced to take part-time jobs during term time to meet their financial obligations and that this is damaging their studies. The study of undergraduates in their last year at university found that nearly half worked an average of 12 hours a week and two thirds claimed that this was affecting their studies. Not unexpectedly, a high proportion of those with jobs came from poorer families.

It, therefore, came as no surprise to the National Union of Students when Prime Minister, Tony Blair, announced a review of student financing when he spoke at his Labour Party conference a couple of weeks ago. They knew it was coming and, while they're not expecting a complete U-turn, they're hopeful that poorer students will have better access to free tuition and more help with living costs.

NUS President Owain James says he's delighted that the government has recognised that the current system isn't working and adds: " We are looking for new money to be invested in the sector and calling for targeted support for students from poorer backgrounds and the abolition of tuition fees. We will be keeping a close eye on the work of the government team, looking carefully at the details and implications of any new initiatives they might announce."

The review is being led by Education Minister, Estelle Morris, and it's hoped her team will report back as soon as January. It's expected that some form of maintenance grant will be offered with a graduate tax being applied once students have left university and started work. While this may sound remarkably similar to the scheme currently in place, it's thought that graduates may not be required to pay back as much as they've received which, in turn, may help them to start their careers a little less in the red.

For more information about debt and how to deal with it, visit our Debt Centre. More on Student & Graduate Loans.