Student DebtIn this report I will examine the issue of student debt and its impact on society

• Repayments should be based on ability to pay rather than repaid in the shortest possible time.

How much does it cost to go to university?

The cost of going to university includes both course and living costs, assuming you live away from home, and involves choices that would seriously affect the amount of debt an individual may find themselves in. Course costs are outlined below:

• Government will continue to pay the bulk of the course costs for all students, through its annual grant to universities. This is equivalent to about £5,000 per student per year.

• From 2006/07, universities will be able to charge students up to £3,000 per year. Payments will be deferred until after they graduate and will then be repayable through the tax system.

Living costs

The most comprehensive survey of students income and spending patterns is the "Student Income and Expenditure Survey" (SIES). It estimates the average basic costs of living at university are £3,665. But average total expenditure was £6,897 in the 2002/03 academic year.

• Total average expenditure has risen by 15% since 1998/99 indicating a substantial rise in students' standard of living. However, is it essential that the students standard of living should be so high?

• Living expenses made up the majority of student expenditure and had risen by 20%. The largest increases were related to spending on non-study related travel and personal expenditure.

Financial Support

The following table compares the proposed system from 2006/07 with the

existing system for full time students.

ISSUE

SYSTEM

EFFECT

Paying Fees

No parent or

student will have

to pay anything

upfront or during

university

A middle class family

will no longer have to

find £3375 to pay for

their children's 3 year

course

Fee

Remission

Students will get

help with the first

£1,125 worth of

fees on the

same basis as

current system

Around 60% of fulltime

students will

continue to get the

same levels of fee

support.

Grants

From September

2004 up to £1k

for poorest

students (under

£21k a year)

Poorest students get

up to £1000 per year

to help with living

costs or with fee

repayment.

Maintenance

Loans

Students will

continue to

receive

maintenance

loans on the

same basis as

the current

system.

All students will

continue to qualify for

a maintenance loan

which attracts no real

rate of interest.

Bursaries

From 2006 no

university will be

able to charge

more than the

current fee level

without providing

bursaries for

poorer students.

Students from the

poorest families will

have enough in fee

remission, grant and

bursaries to cover

tuition fees entirely.

How much do graduates owe now?

SIES say that the average student debt among final-year students in 2002/03 was £8,666.

SIES data also suggest that the average student debt will rise to an average of around £15,000 for those beginning their courses in 2006/07.

However, will this all be worth it?

• Demand for graduates is strong. It seems that employers would much rather take a graduate and mould them than have an experienced employee with bad habits.

• Graduates are more likely to be in work and less likely to be unemployed. They have good qualifications and will be more likely to be employed.

• Around 80% of employed graduates undertake jobs that make use of their degree skills three and a half years after graduation.

Paying back the debt

Graduates Salary

Weekly income

Weekly payments

£12,000

£231

£0

£15,000

£288

£0

£18,000

£346

£5.19

£20,000

£385

£8.65

£30,000

£577

£25.96

Conclusion

To conclude, I believe that, although the debt incurred by a student during their higher education years can become quite a large sum, it is more than worth it in the long run. Not only will graduates be more likely to get higher paid jobs, but they will be more likely to get a comfortable job in a sector that they are relaxed and comfortable at working in. The debt will not have to be repaid until the graduate can afford it, so it will not be detrimental to the students future. All in all, it will inevitably lead to the student getting a very good job in the field that they are interested in working in so, if they are to work for fifty years, it has got to be worth paying for the three or more years that it takes to gain the qualifications to enable you to do that. It is a small fee for a very comfortable future.

Dwain Harris