MILLIONS STRUGGLING TO REPAY “WEIRD” LOAN WILL CREATE “ECONOMIC CRISIS” IN YEARS TO COME
The president of the National Union of Students has warned that graduate debt is a ticking “time bomb” that could have a huge impact on the national economy in years to come.
Liam Burns told today’s Metro he is concerned about the long-term impact of student loans. Although students have decades to repay their debt, he expects many to be keen to wipe the slate clean as soon as possible, even if that means delaying buying a house or having a family. He said:
“As we put people more into this sort of pseudo-debt, this weird sort of tax/loan financial product, are folk going to get on the housing market or are they going to try to pay off their tuition fees instead?
“If you on paper have £40k next to your name, there is a tendency for people to want to pay that off. That doesn’t make any rational financial sense because the terms and conditions of a student loan at the moment are so safe that it’s not rational, but we’re not all walking spreadsheets.
“I think there are lots of unintended consequences. We are creating this economic crisis, we’re sitting in a bubble.”
Graduate Fog shares Burns’ concerns that the practicalities about the repayment of graduate debt has not been properly thought through.
As we know, many graduates who left university in the last few years are still struggling to get their careers started and secure a decent salary. With wages low and the cost of living at an all-time high, saving for the future is almost impossible. Who are all these graduates with extra money lying around to pay off their debts? And these are the ones who haven’t had to pay £9,000 a year in tuition fees, as many of those starting this autumn will. Is it just us, or does this not add up?
Projected figures suggest that the average graduate debt for students starting their course this year will be £53,000 by the time they complete their studies. When the average graduate starting salary is under £20,000 and students must pay 9% on whatever they earn over £21,000, how many years will it take to repay the debt? Maths isn’t our strong suit, but it seems like a very long time…
*DO YOU WORRY ABOUT REPAYING YOUR GRADUATE DEBT?
Or is the debt so big that you almost don’t think about it? How much do you owe – and do you expect to pay the whole thing off? Can you imagine having enough money to buy a house or have a family in the next few years?