A group of English students walking to class. A report by The Russell Group aimed to help student debtors by pushing for a lower interest rate on loans.
The Russell Group, who represents 24 of the United Kingdom’s most prestigious universities, published a blog that urged the government to reevaluate the upcoming 6.1 percent interest rate on student loans, among other issues.
The blog was published on July 17, 2017 by Dr. Tim Bradshaw, the Acting Director of the Russell Group. In the piece, Bradshaw described the 6.1 percent interest rate on student loans as “very high” and “out of touch.” Bradshaw went on to state the following, “A reassessment here now seems highly appropriate as inflation starts to return.”
The 6.1 percent interest rate is set to kick in this September and has been met with much opposition from a number of groups, including a report released by the Institute for Fiscal Studies (IFS). The Student Loan Report covered the IFS report which mentioned that the new interest rate would cause the average UK student to hold more than £50,000 in student loan debt.
Bradshaw also took some time to criticize another policy set by the government, the income threshold. Dr. Bradshaw urged the government to consider raising the £21,000 income threshold. Under this stipulation, once a graduate starts making at least £21,000 annually, they are forced to begin student loan repayment.
“The £21,000 repayment threshold could also be reconsidered. A higher level would allow new graduates to keep more of their earnings early on when individual finances are often tight,” said Bradshaw.
In his blog, Bradshaw goes on to say that he agrees with much of what is already in place in terms of the UK’s education policy. He also noted that students should have to contribute something to maintaining sustainable higher education funding.
“I think we can still look again at how the system might be made fairer for students without undermining the sustainability balance,” stated Bradshaw.
Amongst other suggestions, Bradshaw offered the idea that repayments could be made through an arrangement that takes money out of a student borrower’s salary. This would reduce the tax expense for graduates.
The piece written by Bradshaw on behalf of The Russell Group comes at a time when the student loan debt issue is coming to a head in the UK.
The UK is facing mounting debt overall. According to The Student Loan Report, student loan debt in Wales reach £3.7 billion this year, a 12 percent increase from last year. On a broader scale, student loan debt in the entire UK surpassed £100 billion for the first time in the country’s history.
Any good news is hard to find when discussing student debt in the United Kingdom, and some critics contend that it is hopeless to expect UK student borrowers to pay back their debt in full. Those who look towards the government for help may find only empty hands. Earlier in 2017, the government sold off a sizable chunk of its student loan portfolio to private investors. The deal drew attention, but not for the right reasons, when it was dubbed a “high risk” trade.
Adding to the government’s problems, recently published research revealed that 25 percent of European Union citizens who study in England return to their home country without paying back any of their student debt. News such as this only adds pressure to the situation, and it poses problems to the country’s government as a whole, as well as to taxpayers collectively.
Image Copyright © Ivan Bandura