Yahoo Movies Colossal student debt is a tax on opportunity – and for many it’s not worth it
If you were smart enough, going to university used to be a privilege. A degree was a hugely valuable asset, and taking out a student loan to pay for it was a no-brainer.
Yet now, even despite the eye-watering cost, most middle-class school leavers go to university by default, and take on a huge debt burden. It has become an extension of sixth form, with most A-level students thinking only about what to study and where to do it, and not whether they should do it at all.
I’d wager that many of those who blindly head to university do not understand how taking on such huge debt will have ramifications for the rest of their lives.
It has been 23 years since then-prime minister Tony Blair declared his ambition to send half of all British young adults to university. In the 1950s, fewer than one in 20 school leavers went to university. Now, the nation has hit Mr Blair’s target.
This push towards getting a degree has forced many to believe that they need one to get a job – probably rightly. It’s a good thing that more people are going to university and getting a better education, but the ubiquity of it has inevitably meant that a degree is no longer as valuable as it was. Graduates are finding that they need to stay on and do a master’s degree to stand out from the crowd.
How many of today’s students will graduate with a degree worth the money? In the past two decades, university has become increasingly expensive, while degrees have become worth less and less. Under Mr Blair, graduates were leaving university with debts of little more than £10,000. Now, typical student debt is around £50,000.
It’s a truly mind-boggling sum to owe when starting out and its impact will last until retirement. Student loan repayments are factored when applying for a mortgage, meaning first-time buyers might not be able to borrow as much or have to save longer to get on the property ladder.
Those paying off student debt and trying to buy a home will be less likely to be able to think about saving for retirement.
The problem with such debt is that it has become so large it is unfathomable. For many, there’s no point in thinking about paying it off, because they will likely never do so, or it’s unwise to do so because the interest racks up so quickly.
From September next year students will be saddled with the debt for 40 years, rather than 30.
Interest changes also coming next year mean that taking a gap year this year would add an extra £47,000 on to the loan.
How many of Mr Blair’s higher education generation have been wrongly led to believe that a degree is a worthwhile investment and will grant them access to high-paying jobs and wealth? Not everyone can be a high earner.
If you are intelligent, hard-working and ambitious, you will do well in life, but you still need to pay for a degree to stand a better chance.
Higher education has been used in a Labour social engineering experiment, but those Mr Blair wanted to help have to take a big risk.
Student loans have now become a heavy tax on opportunity.
