The great student loan betrayal

Noah Froud 24 November 2016

Think back to those heady days of sixth form, where sometime between getting your offer and actually getting to university you signed and sent a form off to Student Finance England, promising to abide by the terms and conditions of repayment. We were all told the same things about this repayment: “you only start paying it off when you earn over £21,000 a year”, “it’s just like an extra phone bill, probably only £30 a month”, “you stop paying it off after 30 years anyway”. All of it was true enough at the time. Although little mention was probably made to an interest rate of 3% plus inflation, the conditions were still generous for a loan.

But these terms were unsustainable, within a few years the government realised the new terms were leading to them getting about as much money from students as under the old system of £3,000 tuition fees. With the economy in a rut, graduates weren’t earning enough to start paying back. The stage was set for the betrayal.

What you probably didn’t know about your student loan is that it can change retrospectively. You may have a binding contract with Student Finance, but they have little binding them to loyalty with you. Yes – the government can change your loan after you’ve taken it out. They can increase your repayment rate, increase the interest or decrease the threshold you start to pay it back at.

This is just what the government is doing: instead of rising with inflation as it should, the £21,000 threshold for repayment will remain fixed. In effect, due to inflation making every pound you earn worth less, this means that the threshold will become lower. And with Brexit, inflation looks set to rise fairly drastically. Worse, there is nothing to stop the government making more drastic changes. The 30-year rule? Forget it; you could be paying back your student loan into your sixties.

Economic forecasting is notoriously difficult, but the one that thing there seems to be consensus on is that our generation is the first that will be worse off than its parents. We will be poorer and more overworked with higher rates of stress and mental illness. Not only are we paying more for our education – an education we need more than they did to get a decent job – but the whole economy is distorted against us. Unaffordable house prices combined with an economy slanted towards London mean that many of us can forget about owning a house for years. Graduate job prospects are slowly picking up after the recession but I wouldn’t put it past Brexit to stifle this recovery as big recruiters pull out or move their offices to the continent.

As always, none of this affects all of us equally; the wealthy will be protected. Anyone lucky enough not to have a student loan won’t be affected, thanks to the Bank of Mum and Dad. Anyone whose parents have enough wealth to leave them an inheritance can at least fall back on that for a house.

For the majority of us who don’t, we can’t count on any help from a government which has ignored and betrayed us to pander to grey-haired Brexiters. Throughout the whole recession and ‘we’re all in this together’ austerity pensions, free bus passes and other universal benefits given to over 65s haven’t been touched at all by the government.

Of course, just as not all students or graduates are destitute, not all pensioners are wealthy. But this doesn’t change the fact that the baby boomers, born after the Second World War, lived unsustainably. They had guaranteed jobs and were homeowners in their early twenties, and now the workers of today are paying for their golden pensions. We’re being told we have to save for our retirement from our early 20s – but they certainly didn’t.

The problem, arguably, is that young people don’t vote. With such a vast difference in turnout rate between older and younger voters, it should be no surprise that the Conservatives, who rely on the ‘grey vote’, burden millennials whilst doting on the baby boomers. An aging population meant that something had to give in how we live and work, but it didn’t automatically mean our generation had to be saddled with all the costs. No one else is bearing their fair share.

We need to stop being apolitical and pretending that these things that keep happening to us – like higher fees, rents and worse jobs – ‘just happen’. They don’t: somebody lets them; somebody elected. They aren’t inevitable, they aren’t automatic, and they don’t need to happen. To pretend there is no other choice is to play into the hands of the politicians who break their promises and hang us out to dry.