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The Student Debt Bomb

Out of all the arguments and excuses that people manufacture to justify the financialisation of society, the most difficult one to accept is that creating a market in education is the only way it can be funded.

This view becomes even harder to justify when it is promoted by a generation of people who benefited from free further education.

As many of that generation are now drawing their triple-lock pensions, a younger generation of students are being lumbered with eye-watering amounts of debt, which begs a very simple question: why have British politicians turned the classroom into an asset class?

Host Ross Ashcroft is joined by former vice president of National Union of Students, Sorana Vieru, and lawyer and Fair Loan campaigner, Estelle Clarke.


Throughout their schooling, many young UK students learn about British values: democracy, the rule of law, freedom, mutual respect and tolerance. Imagine the disconnect they must feel after emerging from university lumbered with a millstone of debt that needs repayment.

The ideologies of individual liberty and personal autonomy promoted in British schools suddenly seems insincere when the reality of crippling debt repayment bites.

Former vice president of the National Union of Students, Sorana Vieru told Renegade Inc that universities have been getting a battering in the media over the summer and to some extent she says that has been unfair.

“You’ve got world-class higher education system here in the UK,” Vieru said. “Yes there’s been low debasing discourse around the value of degrees than simply reducing studying to getting a good job and a salary, but it’s about so much more than that.”

Lord Andrew Adonis, the former adviser to Tony Blair, was one of the architects of the UK’s tuition fee system, and is the man responsible for raising tuition fees by up to £3,000, and has made them variable as well. This summer he announced that the system isn’t working as he intended, and that tuition fees are doomed.

“I agree with his conclusion of course,” says Vieru. “I think education should be publicly funded but I don’t agree with the reasons Lord Adonis has given. He’s pointing fingers at greedy vice chancellors and the higher education system not working as a market.”

The real reason for its failure is that education is not a product.

“He’s attacked things right, left and centre,” says Vieru. “He said that polytechnics should have their university titles revoked because the institutions aren’t up to scratch. That’s simply an ignorant thing to say.”

Lord Andrew Adonis, former adviser to Tony Blair, says the UK’s tuition fee system that he helped design isn’t working as intended.

Many people have said he’s making all of those noises on Twitter because he’s actually afraid of Jeremy Corbyn becoming prime minister and trying to defend a New Labour track record in education.

“You can’t just return your degree with your receipt and ask for your money back,” says Vieru.

“Adonis is annoyed that marketisation hasn’t played out as he has intended because universities haven’t actually played ball. They hadn’t tried to compete against each other to the extent that they wanted to.

“He’s trying to shift the blame for essentially creating the entire problem.

“His conservatives can turn around and say ‘we did introduce different prices for different degrees’. It was actually Tony Blair who changed the legislation and made it possible. So I think they’re on a mission to try and defend that it wasn’t in the initial thinking about the system. The idea that it is not the system itself but how it plays out is just simply wrong.”

Rising debt not dissuading students from study

England’s universities are some of the most expensive in the world. But according to Estelle Clarke, ex-city lawyer, fair loan campaigner and advisory board member of the Intergenerational Foundation, the rising debt obligations for education are not putting students off.

“The thing that I find quite difficult to understand is how less well-off students are prepared to even consider going to university knowing it’s basically going to cost them £70,000 by the time they graduate with interest on top,” she told Renegade Inc. “It’s £70 grand. How do students manage to go to university knowing that that’s what their degree is going to cost them?”

Record numbers of students are entering higher education, thanks to income contingent loans where you don’t actually pay anything back until you earn over £25,000.

Vieru told Renegade Inc that education is a positional good and a necessity for the kind of life you want to live.

“Higher education does move people up the career ladder,” she says. “There are simply some professions that you cannot enter unless you have a higher education degree. Some professions require a postgraduate degree. It does open up doors of opportunity, it helps you develop as a person. There will always a big demand for university degrees.

“To some extent I think pushing up the price tag  for whatever the market can bear is a very, very dangerous move because in the future – in the very near future – we might see a lot of the progress in widening participation undone.”

Vieru told Renegade Inc that higher education works a little bit like electricity.

“I think proponents and defenders of the tuition fee system were saying ‘well we keep racking up tuition fees and people are still applying’, and I turn back and say, ‘well of course they are’.

If your electricity company puts up electricity rates are you going to stop turning on the lights?”

Clarke says she is really really angry at how students are being treated and described the UK’s education system as a “perfectly disastrous storm.”

“Everything is about money, and the discussions are framed that way,” she says. “But people are not money.

“And now we’ve got this great disaster because we’ve imposed so much debt on individual people, kids out of school are wandering around with this notion of having up to £70,000 worth of debt when they come out.  How are they coping with that? Well, the answer is terribly from what I can see because the mental health issues with debt are terrible and the less well-off suffer more from being in debt then the better-off because the less well-off are more debt averse. This worries me greatly. I think it’s a terrible flaw in our educational system.

“The terms of student loans are absolutely disgraceful. How anyone thought it was a good idea to pile debt on students, on people who are doing their best for the nation as well as themselves and then punish them financially for it, I simply do not understand that motivation.”

For example a less well-off student graduate is going to pay £12.20 per day just in interest. That’s not even including the capital repayment.

“Because it’s 6.1% compounded monthly,” says Clarke. (Compounding means that every month a little bit more interest is added to the load).

“That’s why I’m so angry,” she says. “It’s a disgrace.”

Debt without documentation

One of Clarke’s children had a problem with student loans company.

“So I said to him ‘well, child, where’s your loan document? I’ll have a look at it. I discovered there was absolutely no loan document whatsoever because there aren’t any loan agreements.”

Clarke said as a former-lawyer, her child’s lack of documentation piqued her interest.

“Obviously you’re not going to have £30,000 or £60,000 worth of debt without a document telling you what your taking on and the terms that you’re taking it on, but students have not choice.” she says. “They just get some sort of vague terms and conditions which doesn’t explain anything. Students are not being told how costs are racking up the enormous amounts of money they’re already paying. There should be tables and there should be explanations.”

Student loan-companies are exploiting the allure and excitement of new students, living away from home for the first time, making the bill of goods an easy-sell.

“They’re being sold the idea that they’re not ever going to have to pay back their debt, that it’s not really a loan,” says Clarke. “The reality is that it is a loan and it is something that matters in your life. It counts against you when you’re trying to get a mortgage but also you don’t make payments for your student loan while you’re at university, so you don’t feel the pain. You don’t feel the extraction from your income.”

Only after university when you’re earning you do start making payments. The more you earn the more payments you make.

“Graduates who are earning decent money are suffering deductions from their earnings and that is impacting them,” says Clarke. “But there’s also this human element to it as well, and the human element is the concept of how it impacts people’s mental health.”

The rise of the sugar-daddy market

One of the ugly side-effects of the student-debt problem is the rise of the sugar-daddy industry.

Investigative journalist, Manisha Ganguly told Renegade Inc that this disturbing sub-culture is the direct result of student debt.

Manisha Ganguly went undercover at a Sugar Daddy service and found men with enormous status & influence offering hefty allowances in exchange for sex.

“My friend came to me and said that a lot of their friends have been going on dates with older men in exchange for allowances, and they created a fake profile to find out what was going on behind the scenes,” she said.

“I started receiving hundreds of messages from men offering me money in exchange for sex and what I found when I went for these dates is that I was entirely a commodity.

They were sizing me up very physically. These were all extremely high profile men and were clearly millionaires.

“So they were out there flashing cash, buying six seven glasses of champagne and shots. There is a legal disclaimer on the website which very specifically states that this is not an escort service because what happens after you set up this arrangement with this old man is entirely up to you.

They are essentially exempting themselves from all the possible safeguards that they might have to put in place to ensure that there is a healthy, non-coercive interaction that goes on between the members on their side.”

It’s prostitution without the ‘protection’ of a pimp. The rise of the sugar-daddy industry is a direct result of Britain’s student loan crisis.

The sites are marketed as a New Age feminist phenomenon where women can take control of their bodies and get rid of their student debt on their own terms.

“As long as student debt persists these problem spaces will continue to exist and companies like this will capitalise on this because what they’re essentially offering is a quick fix a magic solution.”

Accounting trickery hides economy’s failures

Vieru told Renegade Inc that the British economy isn’t working properly but the chancellor of the exchequer, Philip Hammond, is disguising its problems using ‘economic trickery’ on the government’s balance sheets.

Philip Hammond, is disguising Britain’s economic problems using ‘accounting trickery’ on the government’s balance sheets, says Sorana Vieru.

“Student loans are counted as assets because eventually they’ll come back in repayments from graduates so they don’t actually count as expenditure,” says Vieru.

“They’re seen as assets so it looks better on the balance sheet but that’s clearly not true because we know the majority of graduates won’t repay their loan in full. So actually the government is underwriting the system. Right. And this is actually a defence that Conservative and MP for Orpington, Joe Johnson very cleverly employs when arguing for tuition fees. They see this write off this as an investment that the government makes into the system but it’s essentially showing that it’s not actually saving the public purse any money. There’s that argument of why you turn a state giveaway such as a maintenance grant into a loan or comeback, but it won’t come back if you don’t get a good job or good wage afterwards.”

Clarke says education must urgently be state funded, and corporation tax should pay for it, seeing as how Britain’s corporates all benefit greatly from the graduates they employ (and often at well-below market-rates).

“Education should be state funded,” she said. “Education is a very protective thing. It’s not just about people getting better jobs, it’s not just about giving people mobility who otherwise wouldn’t have it.

“It’s not even about marketisation, it is about protecting the country from things like extremism.

“If we can educate ourselves then our nation will be in a better position economically as well as from an information point of view. And that does make us safer? Of course.

The ideology of education for education’s sake is a value which I think is being overlooked at the moment.”

Vieru said she would be very happy to pay more tax if it benefits higher education.

“We all benefit from the research and the knowledge production that goes on into universities and they should be publicly funded,” she said. “I’ll be more than happy to pay more tax.”

Watch the full episode find out how to fix Britain’s student debt problem.

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