archyworldys

Rising student debt compounds financial woes for young Britons

25-year-old student Zeno, who applied for a student loan, pictured on 11 May 2022 in north London afp_tickers

This content was published on May 13, 2022 – 05:54

(AFP)

Rhiannon Muise, 21, graduated last year from Edge Hill University in Lancashire and has accumulated 45,000 pounds ($56,000, 53,000 euros) in student loans, an amount that, according to her, will take “a lifetime” to repay. .

Muise, who studied dance and drama, knows she’ll have a hard time finding a well-paying job, but she doesn’t want to change careers so she can repay her loans.

The pressure of huge debt “is exhausting, especially for a 20-year-old who is just starting to think about his career.”

According to data published in April by Parliament, British graduates carry more average debt per individual than any other developed country.

In England, 1.5 million students borrow nearly £20 billion a year. On average, 2020 graduates racked up £45,000 in debt.

Zeno, a 25-year-old student from London who prefers not to give his last name, owes almost £75,000 to the government on his loans and says that unless he “wins the lottery”, he will be paying this debt out of his salary for 30 years.

– Increase in registration fee –

University used to be free in the UK, which had cost-of-living scholarships for the most disadvantaged students.

But in the 1990s, a reform to make higher education less elitist sent student numbers skyrocketing. And since 2012, he has gradually increased the price of tuition to help universities defray the costs.

In the UK, education is the responsibility of the Home Rule Governments, so Scotland, Wales and Northern Ireland have different provisions than England.

Tuition fees here start at £9,250 a year for British and Irish students. Room and board expenses are separate.

The executive plays a major role in financing, giving loans to students that must be repaid when they start work and earn more than £27,295 a year.

How much they repay annually depends on your income. They have 30 years to pay, after which the government cancels the remaining debt.

– More progressive? –

According to Nick Hillman, director of the Higher Education Policy Institute, based in Oxford, “this system is more progressive than the United States, because of its generous forgiveness for lower-paid graduates.”

However, in times of high inflation, the system can suffer a setback.

In the UK, student loans are tied to inflation, currently the highest in 30 years.

The interest rate is calculated by adding 3 percentage points to the consumer price index. In September, this can reach 12%.

Students will thus have to bear the payment of a high debt, in addition to the loss of purchasing power. All this, added to the effects of the pandemic, which disproportionately affect young people, reducing employment opportunities.

As if that were not enough, wages have not followed the increase in inflation for years.

– Unable to pay –

In the United States, student debt has long been a national concern: the Federal Reserve estimates the total at $1.76 trillion.

American students have an average debt per individual of nearly $41,000, according to the Education Data Initiative think tank, of which President Joe Biden has promised to forgive a “significant” amount.

In the United States – where 75% of educational centers are public – only a small proportion of students go to expensive first-class universities, which means that the average debt is lower, explains Claire Callender, an expert in higher education studies at the University CollegeLondon.

In addition, “American universities offer more aid such as scholarships and grants to attract students than in England, which reduces the need to take out student loans,” he adds.

In other places like Canada, the average interest paid by a student is just 2.5%.

In most of Europe, few students take out loans, as aid is available for low-income families and public universities have low fees.

By 2050, the British government expects outstanding loans to exceed 560 billion pounds ($703 billion).

According to Hillman, more than half of student loans are never repaid. For this reason, from 2023 a reform will give 40 years, instead of the current 30, to complete a payment that will begin as soon as 25,000 pounds per year are earned.

But, with the skyrocketing cost of living and the greatest loss of purchasing power in the last three decades, a significant part of these may never return to the state coffers.

Trending