We’ve already seen an increase in tuition fees, the closing of libraries and the opening of money hungry academies. However, now, The Chief Secretary to the Treasury, Danny Alexander, has also confirmed that the government will be privatising student loans in a naive bid to raise £15billion from public assets by 2020.
Worth approximately £10billion, the selling of ‘The Student Loan Book’ will increase the payments of over 3 million students both past and present. This is because whilst the current interest on a student loan is capped at 1.5%, the government’s new plan means that this could now rise to 3.6% for those who started university between 1988 and 2012 and 3% for those starting in 2012. This is a dramatic increase, that will serve only to subject students to a debt which they neither anticipated nor consented to.
Currently university is one of the foremost contributors to social mobility in the UK. However, more and more young people are choosing to opt out of it due to the rise in tuition fees, and this new venture can only cause more damage. The government would have to be completely blind not to see what a deterrent it would be for young people hoping to attend university. Why should young people be punished for wanting to improve themselves and their education? There is absolutely no reason why university should purely be the playground of the rich.
So why are the government doing this? Despite being described by Andrew Martin Wolf of the Financial Times, as “economically illiterate”, the government are privatising student loans as a quick-fix to boost investments. By selling up, the government will get an initial cash boost and consequently will reduce the public debt before the next election. This is a completely selfish action that will not only put more financial stress on students, but will also prevent the guaranteed cash flow from the loans from going back into the economy.
As if this was not enough, by selling student loans the government are also giving away the luxury of a fixed interest rate. We only have to look overseas to see the potential harm that this could cause to future generations, with the US system currently having a 6.8% interest rate on their student loans. Can we, as a nation, really afford for this to be happening?
It’s a known fact that people are living longer and retiring later, so the money that previous generations have contributed to the NHS and their own state pensions will not be enough to support them in their old age. As a knock on effect, it is the young people of today that will have to provide their social security. Meaning that not only will we have to pay off our own debts for the rest of our lives, but also it will effectively be our responsibility to pay off the debts of those who have already retired.
Although the sale is not finalised until 2015, Dr Thomas Richard Bowers has already started an e-petition against the privatisation, which, if it reaches 100,000, will lead to the matter being debated within parliament. Although this gives a glimmer of hope, the number of individual signatures needed to even reach this stage seems outrageous in comparison with the one greedy government needed to cause the problem in the first place.
To sign the petition visit: http://epetitions.direct.gov.uk/petitions/52145