Student Loans, is the system failing?

The Student loan system has been described as ‘worst of both worlds’ by Dr Ruth Thompson, co-chair of the Higher Education Commission stated that the ‘future financial sustainability of the current funding model is far from guaranteed’. An average £44,000 student debt, as the student loan book is expected to grow from £46nm in 2013 to 330bn in 2044. While, many argue that the fact that you do not replay your student loan until you’re earning £21,000 or more, is a good thing, it means that 73% of graduates will not repay their debt, does suggest that the system we have in place is bad for the students who will have an average debt of £44,000, and the government who will be missing 73% of student debt.

The National Union of Students has suggested that the current fees and debt is ‘broken and unsustainable’. The NUS calls for ‘free education’ funding a progressive taxation from increased business revenue. Megan Dunne, said that it’s ‘education system achievable’ and it’s necessary in the ‘current economic and political climate’. and suggests that ‘forcing debt onto students’ is an ‘experiment’ that has failed students and the country. Suggesting that ‘sky-high fees and debt’ is not the way forward. It is clear that 73% of the debts not being paid off after 30 years, is in fact suggesting that ‘fee’s and debt’s are indeed not working.

One of the suggestions that The Higher Education Commission key recommendations is to give additional funding to the Students Loan Company to improve debt collection from students who move abroad. Another issue that the debt is hard to pay off, even if you have the money to pay it off. An interest of 5.5pc is applied as soon as the first instalment was paid. This means an Undergraduate with a full loan will owe an extra £275 in interest alone. Of the £22.5bn only £388.2m has been paid off ahead of time, according to a recent report from the Student Loans Company. Which suggests that many students, who usually don’t know that interest is applied on each instalment, are unknowing that they could save themselves 20m. Suggesting that the system is broken.

However, a question reminds. What should replace the system?
A system of free education or an improvement to our student finance system? Whatever the answer is, a system needs to be in place where students and parents understand the loan system and the government is able to retrieve more than 27% of the student debt.
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Written ByGeorgina Crespi
This article was first published on

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