
The maintenance grant currently available to students, which
is £3,387 for those in households earning £25,000 or less annually, will be swallowed
up by the current maintenance loan system. This will push the maximum yearly
loan a student can take up to £17,200 for each year of study. For 4 year
courses this could mean nearly seventy thousand pounds in student debt, whilst
the average pay for graduates immediately after university sits at £18,000 a
year.
Since the tuition fee hike,
students from poorer backgrounds haven’t had to begin paying back their loans
until their income hits the £21,000 threshold. This said, there is a sense
amongst the student body, especially after the reneging on the liberal democrat
manifesto promise in 2010 not to raise tuition fees, that no decisions
surrounding the future of student loans are permanent. Government suggests this
has not deterred university applications amongst students, and in particular
those students from lower income households; The DWP quoted a 2%
rise in attendance on last year. As a student myself, there is a definite
feeling that this threshold could disappear or be lowered at any time and this
worries many.
Despite this uncertainty, the student body seems as
happy-go-lucky as they ever did, at least on the surface. But the fear of debt
or it’s long term consequence is there, underneath all the loutish bravado or
introspective geekyness. Although loans are not to be repaid until the £21,000
ceiling is breached, most students still spend their evenings in paid
employment. 59% of students worked to fund their studies in 2014, up two
percentage points on in the previous year and 35% of those asked by the National
Union of Students, who provided the figures above, stated that they were
working to avoid being in debt.
With the release of Osborne’s policy to increase the yearly
amount of student loan available, I can only imagine that feelings of financial
incumbency will grow and students will work more and more outside of their
studies in order to mitigate against the accrual of debt.
During the budget George Osborne also announced the
introduction of a national living wage for over 25’s. Most will no doubt
welcome this but the majority of working students, especially those students
who staff our supermarkets, our restaurants and fill the rolling plethora of
casual vacancies that pop up countrywide, will only marginally benefit. Where
the living wage for the over 25’s rises to £7.20 per hour in 2016, the Office
for Budget Responsibility forecasts a minimum wage increase of up to 20p to
£6.70. This is a meagre rise of £3.46 a week on a 16 hour week. That’s about
the cost of a sandwich from my local garage I think, hardly enough to help.
One of the government’s central goals is to tackle Britain’s
low productivity. According to Joseph Spooner of the London School of Economics,
‘Individuals
struggling with debt difficulties may be unproductive in their employment due to
the demotivating fact that the benefits of their labour will be spent repaying
creditors.’ If students spend their time whilst at university subsisting on
below average incomes that are in large part borrowed, even if they are offered
a living wage, I doubt that this will contribute to higher productivity amongst
the student population. Most students that do not have help from their families
or come from low income households, and that have to work whilst at university
will not have their standard of living significantly risen enough to make the
debts they accrue seem less dooming. In my view this sense of indebtedness,
which runs contrary to the Chancellors goals on raising productivity, is going
to inhibit our young student population and even if access to higher education
has remained unaffected, this sense of indebtedness means that going forward,
students could end up flipping burgers or waiting tables instead of studying.