Most UK students outside of Scotland will be paying back student loans well into old age, and many will never repay them. This, not unsurprisingly, parallels the situation in America, where, according to The Institute for College Access and Success (TICAS) Project on Student Debt, two-thirds of American college and university graduates are burdened with debt, the average student owing $26,600. One in 10 graduates owe more than $40,000. The Consumer Financial Protection Bureau estimate that American student debt is $1.2 trillion, with $1 trillion of that being owed to the American government.
A report by the Institute for Fiscal Studies (IFS), found that a typical UK student would leave university with a debt of £44,000, that is, as of April 2014, over $73, 000. Loans taken out for courses beginning after September 1, 2012 will initially accrue at the rate of RPI plus 3% until they become eligible for repayment on the April after graduation, after which there will be a progressive rate of interest dependent on income. The rate will range from RPI for those earning up to £21,000 per annum, up to a maximum of RPI +3% at a salary of £41,000 plus. Under the new scheme, debts are now written off after 30 years, compared with 25 years under the old system. The report suggests: ‘We estimate that students will leave university with nearly £20,000 more debt – £44,035 under the new system compared with £24,754 under the old one. The vast majority of this increase is the result of … higher tuition fees’. The researchers estimate that UK graduates will now repay a total of £66,897 on average – $110,000.
The UK is rapidly becoming the most expensive place on the planet for a university education. Even under the old system, where tuition fees were a third of present ones, UK students paid for 65% of their tuition costs, which, according to an OECD report, Education at a Glance, was more than double the average for developed countries. This trend, again not unsurprisingly, mirrors the American one. The OECD report stated: ‘In the US one of the issues is cost, the cost for higher education has risen dramatically. It is very difficult for people to afford’. David Willetts, UK Minister of Universities, disarmingly commented: (student) ‘loans have little in common with private borrowing – there is a progressive repayment system that benefits those in low-paid work or with caring responsibilities’.
American student loans are also government backed, and are granted by corporations like Sallie Mae, or by the Department of Education. These Federal backed loans are seen as safer than private ones, as they are subject to income based repayment, fixed interest rates, and take nine months to default on, wherehas private lenders claim default on loans after a single missed payment. Default results in a bad credit rating, which drastically curtails future ability to access a mortgage.
Corporations like Sallie Mae borrow at near zero interest rates from Federal Home Loan banks, whereas undergraduate students borrow at 3.85%, and graduate students borrow at 5.4%, enabling Sallie Mae to extract $2.5 billion in interest payments from student loans in 2012. Not unsurprisingly, according to the Center for Responsive Politics, Sallie Mae spent nearly $2 million lobbying Congress in the first half of 2013 to keep the spondoola flowing.
The result of such government backed, corporate bloodsucking is that American student default rates are soaring, with 17% of student-loan borrowers being 90 days or more behind in payments at the end of 2012. America’s British Colony (ABC), the UK, places a crippling burden on students, and it is prefaced on a lie disguised as a generality, that is, politicians sell student debt on the basis of the so-called graduate premium – a generalised notion of extra earnings that someone can command if they have a degree. This is undoubtedly the case for the brightest graduates of the best universities who are to the manor born, but it does not apply to who the upper crust governors of ABC secretly deride as ‘Joey Media Studies’ from ‘Outback University’. It is a cruel hoax to pretend that it does.
How is this lie sold to Joey? This is depressingly easy to answer. Joey does not ask for a cost analysis – how much per hour is being paid for lectures of one and a half days a week over three years, and what does this pay for – because Joey has never experienced the gruesome reality of debt, and the reality of what waits seems a long three years away.
What awaits are the talons of private debt collection agencies. Joey joins the ranks of the eight million Britons who are in serious debt, which is sold on by the initial lender for pennies in the pound to third party debt collectors, who may telephone Joey 7 days a week, many times a day, from cock-crow to sundown. Joey might be the recipient of regular letters that appear to have come from the court, which say ‘Intent to Commence Proceedings’, or ‘Notice of Intent’, or other such delights, such as neighbours being phoned to ascertain Joey’s whereabouts.
Joey’s fate is certain. The Government plan to privatise the student loan book, and in order to make it profitable for speculators like Sallie Mae, the cap on interest repayments will be increased or removed. Low-interest terms can be changed at any time under the terms of the 2008 Sale of Student Loans Act , which does not require any consultation or parliamentary vote. A recent feasibility study by Rothschild’s on ways to ‘monetise’ outstanding student loan liabilities (estimated to reach £95 billion in today’s terms by 2030), considers a change to the terms of loans, which could be retrospective, as was the case in November, 2013, when ABC’s political hirelings sold student loans worth £900m to a private debt collector for £160m, a firesale which included all student loans taken out before 1998. ABC’s Chief Secretary to the Treasury, Danny Alexander, stated in Parliament in June of the same year: “We will take action to sell off £15 billion worth of public assets by 2020. £10 billion of that money will come from corporate and financial assets like the student loan book”. His conspirator in this ruse, David Willetts, confirmed to a parliament select committee that it is very easy to alter the terms of student loans: “In the letter that every student gets there are some words to the effect that governments reserve the right to change the terms of the loans”.
The ABC student loan system was a short-term ruse to trap Joey, a ploy by politicians who always intended to sell Joey to to their corporate paymasters. Yet, at least Joey and friends will not feel isolated – they will be part of a growing global community, joining those 2 million Americans over 60 who are still paying back student loans, who were forced to delay or abandon buying homes and cars, or having children. Because of interest payments on debt, some now owe two or even three times what they originally borrowed.
There are two contrasting solutions to Joey’s problem. Solution 1: Make the system more fair. Interest rates on all student loans should be immediately lowered to non-profit levels, with borrowers paying the same interest rate the lender pays to get the money being lent, which is currently less than 1% in America and its British colony. Accumulated debt should be paid only when income is 150% of the poverty level, and then at 10% of any excess. All debt to be written off after 20 years. Governments have the power to override existing loan contracts and force new interest rates and repayment schedules on speculators. Solution 2: Overthrow the system. Social mobility in England is grinding to a halt. Germany is abandoning tuition fees. A spokesman for the Social Democrats said: “Tuition fees keep young people from low-income families from studying and are socially disruptive”. Not that German students are bled dry. Students at Hamburg University pay €750 a year, with Government grants being available of up to €600 a month for those from low-income families.
When the lie is cast that ABC can not afford such largesse, one comment might be that notions of national debt are imaginary, and only exist within computer memory chips, and the perceived scarcity of public finances is propaganda that justifies spending cuts, and consequent privatisation of state assets and services. Yet, even if you believe in the ‘reality’ of national debt, the cost of providing free education for all should be judged against that of imperialistic (oil) wars. A report from Brown University concluded that the total cost to America for wars in Iraq, Afghanistan, and Pakistan is between $3-4 trillion. As of March 2006, £4.5 billion had been spent by ABC in Iraq, this coming from a government fund called the ‘Special Reserve’, which is allocated billions. By 2013, Richard Norton-Taylor estmated that ABC had spent £37 billion on the Afghanistan campaign. Whatsmore, Joey will not be able to hide from his creditors, for ABC has spent £2 billion on developing drones!
War spending allows ABC’s political light-weights the opportunity to strut the world stage on behalf of their American masters, and to eulogise over dead soldiers, who, in their terms, as in the hymn, ‘died to save us all’. No mention is made of the scandalously callous way surviving soldiers are treated on their discharge.
Overthrow this rotten system, and restore free education for the masses.
lenin nightingale 2014