NEW: Weekend @TheNewsAgents. Students are at the centre of the cost of living crisis/housing crises. The value of their loans has gone ⬇️. Their stock of debt through interest climbs ⬆️. But they’re rarely talked about. This ep puts them front and centre. podcasts.apple.com
The accommodation which students often pay through the nose for is often antiquated, at best. We spoke to a group of students at Manchester staging a rent strike, such is the poor quality do their halls. Vermin, sporadic heating/hot water, mould etc ⬇️
According to the ONS a massive 90% of students say they’re worried about the cost of living. 77% are concerned that it’ll affect how well they do in their studies, and 30% say they’re choosing to miss non-mandatory lectures or tutorials to save on costs.
And meanwhile what’s happening to their maintenance loans? Declining in real terms. Earlier this month the govt announced it would increase maintenance loans in September by only 2.8%, despite inflation running far higher. It’s estimated their real terms value will have fallen…
…by £1500 since 2020/21. But students’ costs, especially for accommodation are going up and up. There’s been no big package of support to assist- it’s piecemeal. No wonder that one of the students we spoke to in Manchester said he was spending 70% of his loan on his room alone.
And that brings us to the idea of having maintenance loans at all. It’s not understood enough how the Osborne replacement of maintenance grants with loans has compounded already profound inequalities between students. Kids from poorer backgrounds often now graduate with more debt
And boy is it a lot of debt. When I was at university it was typically around £20k. Now £50k, £60k and more is not uncommon. And the interest charged on it has gone up. Again it’s not understood enough- most grads dont begin to repay the debt for a long time. It just goes up.
On the podcast you can listen to just three of our team on @TheNewsAgents checking their debt amount (something they don’t usually do because it depresses them). All of them have been in work since graduation, two for 6-7 years. For none of them has the debt stock gone down.
The system, without it ever really being discussed, through incremental change, has largely moved beyond being a student loan system. The debt stock is too great. The interest too high for many students to have a realistic chance of paying it off, especially in medium term…
…what it basically is a form of graduate tax. As such we see that even graduates on relatively modest incomes- say £27k, are faced with a marginal tax rate of well over 40%. A grad on £50k over 50%- higher still with postgrad loans.
Except you can see we at least don’t have the benefit of being a graduate tax which would at least be universal. As I say, as a result of the Osborne decision to convert…
…grants to loans poorer kids are more likely to leave university with more debt and therefore a greater ongoing *tax liability* than richer ones. Rich families can basically buy their kids out of our quasi grad tax by paying for some or all of their fees/maintenance…
…and opt out of some/all loans. Again I can’t stress enough how extraordinary this is. We’re basically levying an ongoing extra income tax on working class students/grads, who had the temerity to be born to parents who can’t pay their way out of the system.
How many of those in the Cabinet in 2015/16 when Osborne made the change will help their kids and reduce their loan liabilities? I suspect a great number. Their Working class constituents can’t do the same. Net result? the tax system literally embedding intra-generational…
…inequality. Making it harder for working class kids/grads to save to buy assets/pensions acclimate wealth, while their already affluent counterparts will find it easier.
This is…not what the tax system is supposed to be about. And we almost NEVER talk about it.
This is…not what the tax system is supposed to be about. And we almost NEVER talk about it.
The de facto graduate tax is also largely regressive once you reach the earnings threshold. What we have atm, in other words, is the worst of both worlds. Often no realistic chance of paying off the loan but with no universality, nor progressive outcomes of a proper grad tax.
And btw not even the universities are happy. They point out the £9,250 fee has itself declined in value. They say they’re not able to fund courses properly, having to rely increasingly on international students (higher fees), cut teaching time etc. a crunch is coming.
So we have a funding system which in some ways at least is making inequality worse both *between* generations and *within* generations. Which is, hardly ideal and as I say simply not sufficiently understood.
Suspect if we effectively had a wealth tax which was…
Suspect if we effectively had a wealth tax which was…
…charging 9% of the value of expensive homes (belonging to prosperous, older people) then we wouldn’t hear the end of it, especially in the papers. As ever the young are a convenient cash cow as they have little power, especially the poorer ones.
Too often these arguments dismissed with a (dare I say it) sometime boomerish insouciance- the “we had it bad/worse in my day.” On so many measures, I’m afraid to say, you really didn’t.
Listen to today’s ep in full here. Produced/edited @_EllieClifford @RadusGabriel. Film shot/edited @RorySymon
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