Tag Archive: debt


Only a quarter of all graduates will pay off loans – The rest in debt for life as Government’s own figures suggest new university fees system is unsustainable.

By Brian Brady
Only one in four graduates will pay back the full cost of their tuition fees under the coalition’s new system for financing higher education in England.

The Office for Budget Responsibility estimates that the Government will have to borrow £10.7bn to pay out student loans in 2015-16, compared with £4.1bn at the moment – with all but £1bn of the £6.6bn increase due to the tuition fees reforms

Internal government figures, seen by The Independent on Sunday, reveal that a small minority of students paying fees of up to £9,000 a year are expected ever to pay them off in full. Ministers believe most graduates will spend their whole working lives making monthly payments to cover their loans and interest – without ever being able to settle their debts.

The planning assumptions raise questions about the sustainability of the new system, just days after the Deputy Prime Minister, Nick Clegg, survived rebellion among his own Liberal Democrat MPs to get the proposals through the House of Commons.

A briefing note from the Department for Business, Innovation and Skills (BIS) has revealed that: 25 per cent of graduates will repay “at least 100 per cent of the original value of their loans in PV [present value] terms”; the “best-case scenario” foresees a maximum of only half of graduates settling their debts; up to 60 per cent will never pay in full.

Labour has claimed the assumptions underpinning the new system raised questions over its sustainability, for graduates and universities alike. The shadow universities minister Gareth Thomas said: “The Government’s figures look more and more questionable. “When even they think such a high number of students will not be able to repay their loans in full, it underlines just how unfair and unsustainable it is trebling student fees.”

The Government has ruled that students must foot the bill for improvements in the higher education sector by allowing universities to raise their cap on tuition fees from £3,290 to £9,000 a year. But ministers ruled out an across-the-board “graduate tax” in favour of student loans, repaid when graduates enter the jobs market. To improve the “progressivity” of the system, the Secretary of State for Business, Vince Cable, decided that graduates would be required to start repayments only once their salary reached £21,000. During the crucial debate in the Commons last week, he said: “We are introducing variable interest rates so that those on high incomes pay relatively more to ensure the progressivity of the scheme.”

Clegg claimed that the “graduate contribution scheme” was fairer than the graduate tax proposal advocated by the National Union of Students. The Government will pay 30 per cent of the cost of the loans issued, to subsidise the preferential interest rates and cover losses through defaults.

The Office for Budget Responsibility estimates that the Government will have to borrow £10.7bn to pay out student loans in 2015-16, compared with £4.1bn at the moment – with all but £1bn of the £6.6bn increase due to the tuition fees reforms. It has emerged that the Government is assuming that the bulk of public investment in the new system “will be repaid by high-earning graduates”.

But, despite the suggestion that the highest earners would carry most of the burden, it is estimated that the lowest-earning graduates would not be protected, even if their salary remained below the payback threshold. Peter West, an expert accountant said the combination of inflation and interest charges meant many graduates, including teachers, would never reduce the amount owed.

He said: “The Government tells us that those earning under £21,000 will not have to pay interest on their loans. But they will have to pay inflation in line with the Retail Prices Index, which is currently 3 per cent higher than the base rate of inflation.

“If you ask anyone what paying no interest on a debt means, they would say the amount owed stays the same. The Government is being dishonest about the implications of this system.”

But Cable claimed that the new rules were “fairer than the present system of student finance, and affordable for the nation”. He says a quarter of students will pay less than at present. He added: “There must be a link between the financial advantages conferred by a degree and the contribution made by the graduate. A high-earning banker or lawyer should pay more than a nurse or youth worker.”

Recent polls show that the LibDems and Clegg’s personal ratings have also collapsed from a pre election 22% to a paltry 8%. They are in real danger of polling less than the greens in the next election.
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Surrey University Student’s Meeting:
Save Our Services – Cuts In Surrey

26th October,
Student’s at the university invited Chris Leary from Save Our Services in Surrey to address its weekly meeting at the University.  

Around fifteen students and supporters attended the meeting. Markus, Society President, opened with a short speech about some of the concerns he and his fellow students have about the cuts.

“Universities are about to receive a 40% cut in funding across the board”, he told the meeting. “The funding for STEM (Science, Technology, Engineering and Technology) subjects is to be ring fenced, so that the Arts and Social Sciences will no longer be publically funded, but will be paid for through fees alone. This represents a decisive break from the liberal education ethos of the Post War University system”.

“As a consequence Universities like surrey are already concentrating on recruiting non-EU students, who are charged higher fees, in order to make up the shortfall”.“The Lib Dems are beginning to distance themselves from the recommendations of the Browne Report, fearful of the backlash that is gaining momentum. Ministers are talking about raising the cap on fees to £12,000 instead of a total abolishment of the cap. Meanwhile, the Scottish government voted to keep education free earlier in the year”.

“The University’s Vice Chancellor is keeping quiet about the cuts that are about to take place in the University. However, two Sociology lecturers have already been threatened with redundancy, with minimum redundancy payments, unless they take early retirement”.

“The head of the Law Dept. has been forced to take a sabbatical and her vacant post integrated into the Hotel and Catering Management Dept. Another lecturer was sacked on the flimsy pretext that a letter of complaint she wrote was insulting. Meanwhile, the School of Law has been integrated with the school of Management and is now called The School of Law and Management”. These moves represent “cuts by the back door” Markus told the meeting.

After a screening of some short films, showing how students around the country are resisting the cuts, Chris Leary from Save Our Services in Surrey addressed the meeting. He said “Social Services in Surrey are going to be hit hard by the Comprehensive Spending Review”(CSR).

“A report published by credit analysts, Experian says that Guildford is the eighth best placed borough to cope with public service cuts. However there are many pockets of poverty in Surrey”, Chris said. “Spelthorne, a borough in North Surrey was estimated by the report to be seventieth on the table”.

“For example Esher, a small town in the centre of Surrey, is divided by the railway that runs through the town. There is a ten year differential in life expectancy between the two halves of the town. Surrey is not all stockbrokers” said Paul.

“Surrey needs its public services to survive”, continued Paul. “And Council workers spend their money in the local economy, unlike Surrey’s stockbrokers, who stash their money in off shore accounts. Once the public sector redundancies start, the whole economy will suffer”.

“500 Local civil service jobs are due to go as town centre offices are closed. The job Centre is also due to be cut, just when unemployment is rising in the area. Funding for the National Tax Office in Woking is to be slashed, whilst corporations get away with massive tax evasion”.

“Vodafone for example, has recently had a six billion tax bill written off because the government claims it doesn’t have the resources to pursue the company through the courts”.

“The axe has already fallen in Surrey before the CSR was published. Surrey’s primary schools have been urged to become academies thus removing the council’s responsibility for primary education. Thirty Connexions careers and guidance centres are to be closed in Surrey, leaving only two centres for the whole of Surrey. The Council’s policy is cease providing all services that it is not required to provide by law. This includes bus subsidies and youth centres”.

“Road building projects have been scrapped. The Guildford town centre Council offices, employing 2000 staff is set to close. Community Support offices in Frimley, Farnham, and Staines are going to close. Family support and social workers’ funding is going to be scrapped”.

“A third of the Local Government and Communities budget is going to be slashed. Meanwhile Surrey Council has received the lowest Ofsted rating for its services- and the council’s response?..To discuss suing Ofsted for lying!..You couldn’t make it up! But the real reason for the lack of proper services is of course a lack of funding”.

“These cuts are ideological and politically motivated. The national debt is not historically high as the government would have us believe. It now stands at 48% of GDP. However, for most of the 20th century the debt has been over 100% of GDP. Five years ago the debt stood at 38% of GDP, so when the government claims that New Labour has massively increased the debt and led us into this impasse, they are lying”.

“The debt is not a problem. The government could easily restructure the debt in order to pay it over a longer time if it chose. A 0.05% tax on speculative financial transactions, the so-called Robin Hood Tax, could net the country 30 billion a year, halving the deficit”.

“David Cameron, speaking on Radio 4 two weeks ago was asked if he was going to reverse the spending cuts once the deficit had been repaid- and of course, he said no”.

However Chris told us, “These cuts can be defeated. We have already had successes. Brooklands College when threatened by closure drew a huge reaction from the local community. A campaign spearheaded by Save Our Services in Surrey brought together staff, parents and students and forced the council to save the college”. “Shortwood School in Staines was saved through a mobilisation of the entire community”.

 “We need to link up all local struggles to save services. These cuts are a unified attack and they require a single unified response”. In the ‘90s we saw the defeat of the Poll Tax by the whole community coming together and refusing to comply. This is the response we need now”. Already we see ministers starting to backtrack on Child Benefit and University fees.

Redhill Coalition Against Cuts Meeting:
7pm on Tuesday 2nd November @ The Garlands, Brighton Road, Redhill.

North Sussex And East Surrey Anti Cuts Coalition Meeting:
8pm on Tuesday 2nd November @ St John Church Hall, in the Broadway, Crawley

(Sponsored by North Sussex and East Surrey Trades Union Council)

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Botom-Of-Post - Protest