There has been much debate about the huge increase in tuition fees. On the one side, those committed to a free (or at least affordable) university education who feel this burden of student loan debt will fall hardest on the least well off. On the other side those who say that the huge growth in student numbers makes greater state funding impossible, focusing on the fact student loan repayments are made based on your income so you don’t pay it back when you are out of work or have a low wage.
One thing neither side of the debate often comment on is that student loans will, in most cases, not be the only debt that a young person leaves university with. I went to university in the first wave of tuition fees in the late 90’s and took out the full student loan (a measly £3000 or so at the time I seem to remember) to pay them and some of my rent for the year. Still, despite working for a year before university to save money, I found myself applying for a credit card along with an overdraft on my student back account before I’d even got my loan.
Why? Because we seem to forget that as well as paying fees students actually have to live somewhere during term time, travel to lectures and eat. Increases to tuition fees and the loans to cover them cancel each other out in the short term, putting off that worry until they are earning, but they are still left with the same outgoings, rent, bills, food, travel, as everyone else just with limited options to earn money because of their studies and no access to any benefits normally available to those on low incomes.
It’s hardly a surprise that most students have to acquire other kinds of debt in order to meet these day to day expenses. I wouldn’t even say it is a poor choice on their part, given the options. To me it seemed perfectly logical that I’d have to accept putting my food shopping on my new credit card during term time and hope I could get enough work in the summer holidays to pay it off then. Of course, I never quite did.
Of course the big difference with this kind of debt is that you don’t have that breathing room after university that the income based student loan gives you. Repayments on overdrafts and store cards carry on regardless and if you haven’t been lucky enough to fine a decent job straight away that is where problems can really start.
I’m not in any way against the principle of credit. Far from it, I’ve certainly had plenty of cards and loans myself over the years. However, I think it is important to remember that this kind of consumer credit plays a big part in the way students finance their time at university and we should not kid ourselves that the low rate student loans are the only thing they have to worry about.
[Note: This post is brought to you by Lloyds TSB]