Thursday, 17 November 2011

Is Student Debt the Next Sub-Prime Mortgage?

University graduates are among the 1 Million young people who are out of work in UK. I know a few of these young people and it is so sad to see them having to downgrade their ambitions. When they first went to University they had dreams and hopes and now they are sending applications off for jobs that they didn't need to go to university for. They worry about paying off their student debt eventhough they aren't eligible yet to pay it off. Nobody wants debts.

But if these students aren't paying off their debts and are having to claim benefits then isn't the Government going to end up paying a lot more? I know that in America the student loans are private loans but in the UK these loans are Government backed so loans in the UK can't quite become sub-prime loans. Nevertheless, I worry that student loans will end up costing the country in the long run. With the student fees going up the level of debt will increase.

I think it is time to stop selling young people the false dream of a University degree providing a secure future for all and that it equals employment.
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5 comments

  1. It will in the short term but Student Finance used to be free so its no different to tuition being free then those Students going on to the dole after Uni. The only difference is that with the Student Loans, the government will get some of it back and some of those will be paying back with a lot of interest.

    So I think your worry is unfounded.

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  2. Dear Nic,
    But the government may not get all of it back. What happens then?
    Maelo

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  3. Then nothing. It would be like the days pre-97 when there were no student loans just student grants and the general taxpayer paid for University, only difference is that the government is going to get some if not alot of the money back.

    The main problem is growth and the crisis within the education system in the fact that most people don't know how to or are too scared to create their own businesses which creates jobs.

    If we don't create jobs then there are no jobs for these graduates to go into. The graduates in and of themselves should be creating jobs.

    Part of the reason why Conservatives believe if you cut the public sector, the private sector grows. The reason why the private sector grows is that by cutting the public sector you release human capital that then goes and creates jobs.

    The problem is under Labour our education system didn't give people the skills and/or the self-confidence in order to create businesses. I like to call it the American spirit in the fact that you go out, try and create a business/what you love doing, if it fails, then you pick yourself up and try again.

    Within the public sector as well, people weren't I don't think given extra training to try and improve their skills so that they could improve their standing. Or they work within a particular branch of the public sector where it is very specialist so that if your job goes then its hard to get a job doing something else as you need to re-train.

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