2 May 2019 12:12pm

Debate: should governments cancel student debt?

A collection of experts, academics and public figures address whether governments should cancel student debt, and the pros and cons of doing so

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Caption: Photography by Getty Images

Bernie Sanders

Vermont Senator, on Twitter

“I have met people with $300,000 in student debt. That is crazy! We have got to make public colleges and universities tuition-free and substantially lower student debt.”

Dr Jack Britton, Carl Emmerson and Laura Van Der Erve

In the Institute of Fiscal Studies article How much would it really cost to write off student debt?

“Amid continuing debate over university tuition fees there remains confusion over some important numbers. We showed before that scrapping tuition fees for new students would increase borrowing by £11bn a year.

It has more recently been suggested that debt accumulated by graduates under the £9,000 a year tuition fee regime should be written off. If that policy were implemented immediately it would have almost no effect on government debt in the short run, but due to reduced future repayments from graduates, would increase debt by around £20bn by 2050. If implemented after an election in 2022 the cost would be much higher, adding around £60bn to debt in the long run.”

Sorana Vieru

Vice-president for higher education at the National Union of Students, responding to the news that student loan debt in the UK had risen to more than £100bn for the first time

“These figures show how the cost of education has been systematically shifted on to the backs of individual graduates, in debt that will never be repaid. They raise serious questions about whether these loans are the best way to fund our education system and what’s best for the sector, taxpayers and the public.”

Kevin Albertson

Professor of economics at Manchester Metropolitan University

“Economic efficiency in a market place requires that those who benefit from transactions pay their fair share of the cost. The average cost for a student of doing a three-year university degree is at least £47,750.

According to data published by the government in 2013, the average graduate will receive an extra £210,000 over the course of their career. The average extra tax paid is £291,000. Thus the total average financial benefit of higher education accrues 58% to the nation and 42% to the individual. The nation ought to pay 58% of the £47,750 cost of a degree: £27,742, or £9,247 per year over three years.

The government can borrow at 0.75%, so why should students be forced to pay circa 6%? For reasons of economic efficiency, student undergraduate fees should be abolished. Loans taken to finance existing graduates fees should be cancelled for reasons of social justice.”

Simon Jenkins

Writing in The Guardian

“The existing loans system was transformed by Tony Blair’s introduction of tuition fees in 1998, then privatised, then sent through the roof by David Cameron in 2012. It is the unacceptable face of privatisation. It has turned graduates into cash cows for loan collectors, and turned universities into fat-cat peddlers of cheap courses for inflated fees, guaranteed by the Treasury.”

Dr Muhammad Rakib Ehsan and David Kingman

In the Intergenerational Foundation report Escape of the wealthy: The unfairness of the English student finance system

“There are a number of reforms which could be made to provide an intergenerationally fairer higher education system in England. Tuition fees could be reduced back to the levels they were before the 2012/3 hike following the Browne Review.

The government could reintroduce comprehensive means-tested maintenance grants to reduce the costs of higher education for England’s poorest undergraduates. The interest rates charged on student loans could be dramatically reduced if they are pegged to the interest rate for government borrowing (which is currently 1.5%). Another, more radical, idea involves greater state investment in funding tuition fees.”

Justine Greening

Chartered accountant and former education secretary, on Radio 4’s Today

“Young people from more disadvantaged, poorer backgrounds are coming out like for like on the same course with more debt than their better-off peers.”

Dr Ariane De Gayardon

Centre for Global Higher Education, UCL Institute of Education

“Government student loans have allowed students to afford the increasing price of their studies and have been essential instruments in the expansion of higher education. Student debt is a by-product of these systems, creating a financial and psychological burden that could have consequences beyond the financial domain throughout the graduate’s life.

Academic literature suggests that individuals with student debt are less entrepreneurial, have more difficulties buying a house, are less healthy, and are in a worse financial condition. Women graduates with debt also tend to delay marriage and having children.

Governments should include debt forgiveness in the design of their student loan system. Forgiveness could be awarded after a set period, that both allows appropriate loan recovery for the government while preventing a long-term burden on graduates. Such a system, coupled with income-contingency, would allow high earners to repay their loans in full, while low-earners are subsidised by the government.”

Lord Andrew Adonis

Director of the No. 10 policy unit under Tony Blair and the “architect” of university tuition fees, in a column for The Guardian

“Within a few years – probably after the next election, maybe before – popular pressure will force a cut in the fee level. Fees have now become so politically diseased that they should be abolished entirely.

In return, the Home Office absurdity of including overseas students within the net migration figures should be ended, so that universities can compete on a level playing field with the US, Australia and European countries for the expanding international market for higher education. As part of this bargain, universities will have to commit to a minimum number of places for British students.”

Jed Oelbaum

On Make Change

“Having the federal government cancel student debt on a serious scale, proponents argue, would be a similar manoeuvre to avoid financial crisis, though this relief effort would be focused on consumers rather than Wall Street.”