I Will Deal With It

Thanks dj Brilliant piece. I have long felt that student debt was wrong in principle but to see it reasoned out like that was reassuring. So I am not just an old leftie who believes education is a vital part of our society and should be free to all, but there is real economic sense behind not having student debt as well. Hurrah!!!

"In that case, thirdly, let’s recognise that this means the debt does not have anything to do with education per se: it’s just been a convenient way of dropping part of government debt onto a particular group in society who may pay 10% extra tax for much of their lives as a result and be denied the chance to afford a house, raise a family or save as a consequence. This is financial engineering in that case. It is not about being a student. And if in doubt think about it like this. Instead of making students bear part of the national debt suppose we made other people do so instead. So, if you went to hospital you’d have to pay more of the national debt as a result. Or if you had a fire you’d pick up a slug of debt. And what about if you didn’t have children? You’d get a national debt refund for not burdening the state in the Gove / Cable personal costing formula . All these are analogous to what’s been happening with student debt, and as absurd.

We should pick those who go to university because they have the ability to attend and will benefit society by doing so. I know that the current system does not produce outcomes without bias, but maybe that’s at least partly because of the debt. And we also know now that fire is not always a random chance either. And nor is ill health. But we realise we should spread the risk of these last two, at least in principle. So why not also spread the risk of being able to benefit from university? We all gain as a result. Instead Cable and Gove seem to have utterly forgotten the role of government in pooling risk and benefit as a result. Let me be clear, having higher rates of tax for all on higher incomes to tackle potentially resulting inequalities is absolutely fine: I welcome those. But what I don’t see is why we should privatise the national debt to a portion of society.

So what should we do?

First scrap fees.

Second, scrap the student debt now owing and use QE to buy back that already sold to third parties.

As a result make a level playing field. And give people a chance in life.

As importantly, boost the economy by reducing the crushing burden of debt that hangs over so many younger people now before they might ever think about going near a mortgage. If this debt is taken off them they may spend more. But as importantly they might have a chance to live.

And then a lot of politicians need to say sorry. Because student debt was never about paying for university at all. Student debt was about dumping national debt off the balance sheet and onto the young. whilst extracting a profit for the financial services sector on the way. It was always a scandal in the making. It;’s time the scandal was brought to a close.

It’s time too that Cable and Gove worked out the reason for government. But maybe that’s too much to hope for."

Tax research blog.
3/7/2017
It's time for all politicians to say sorry for the scandal of student debt.

Quantitative Easing will pay it all off.

But you are all talking on the premise that he will not do it when he becomes PM.
I think he will.

Elfies, yes I agree, having been faced with the question he made a statement that he thought implied he would look into it when in a position to do so for the next manifesto or as PM. However, it is naive to assume that an experienced interviewer will not look for the part pertinent to the issue not mentioned and ask the question. Politicians need someone to play 'devil's advocate' and look for the hidden angles the interviewer will seize upon and take them through those paces in advance. If you are talking about how students should be financed it is reasonable to expect a question on existing debt and its burden and your solution. All politicians need to do thorough homework in advance, spot the loopholes and have the 'let out' phrase to hand - and then have a better answer when next asked it, which they will be.

Penstemmon, on a lighter note, the best advice I ever got about having a good clear out, and one I follow to this day, is to take everything out (in your case to the garden on a good day), clean and tidy interior and then only put back what you know you want in there. Sooner or later, you or someone else, will get fed up with the rusting pile left behind and take it to the dump. This works every time for me and for every room. By this method I got husband to go through his clothes and only put back what he really would wear. We took to charity shop three massive bags of clothes. I did 'allow' him to keep the odd sentimental item of clothing. Even I am not that harsh.

I think he genuinely meant 'I will deal with it',as in I will look into it !
In no way could he physically do anything about it , at the time or now, without the full details and costs and the authority to access all details.
One day when he is Prime Minister, he will have the power to authorise a full enquiry

I heard the original interview and I do think JC hadn't expected that aspect to be put to him so said what he thought would be non committal. Alas, as you so rightly say, the DM latches on to everything. You will wait a long time for the record to be put right on that and other matters.

Don't hold your breath dj

Devorgilla, if you read this link you will see it wasn't a throw away remark.

voxpoliticalonline.com/2017/07/23/next-time-someone-tells-you-jeremy-corbyn-promised-to-wipe-out-student-debt-show-them-this/
Watch the video.
The DM has taken words out of context, omitted others completely, and given the intended message to anyone who dislikes Corbyn. But it isn't what he said.
I wonder when/if the DM will put the record straight.

Well done so far, Penstemmon. I keep telling myself I will deal with the mess in the shed every time I put something just inside the door as I can't get any further in.
I then shut the door and forget about it until the next time I open it.....

My 17 year old granddaughter is very aware of the housing crisis as is her 24 year old sister, who lives in Manchester. The 24 year old was going to take a year off when she was 18 and didn't because that was when the nice Tories said they would put fees up to £9,000 a year. She managed to get in on £3000. Quite sensible of her. She also worked all the way through her degree so she had enough to pay her rent.
I am sure there are lots more sensible, aware students who care about the housing crisis. They shouldn't have to when they are students, but being given a debt of over £50,000 to start your working life with doesn't allow for carefree student days any more.

Trisher, I agree with much of what you say. A graduate tax helps repay the taxpayer some of the money and is in line with the better off paying more. The country also benefits from their higher education. The key argument here is how you word things if a public figure like JC where every statement is taken at face value, interpreted by others and examined under microscope from every angle. That's true of all public figures who make a 'throw away' remark under pressure. It never fails to amaze me that politicians still fall into the trap.

No, it is not taken into account for a mortgage as almost every student has the debt. Also, until you reach a certain level of salary, the repayments are quite small. Not all graduates are in what were traditionally termed 'graduate' employment so do not earn the higher amount. My youngest will pay off the debt in about three years and does not expect any of it back no matter who is in power. The luck of the draw as they say. Nightowl, perhaps it depends on the mortgage company. My youngest is buying her own place and was told they don't take any notice of it.

"I will deal with the overgrown garden" is what I said when we bought this home. 7 years on it still needs work but I am getting there but unexpected issues, beyond my control, have delayed my original timescale. I will get there eventually and lots of the garden is what I planned.

Yes it does petra. It is taken into account for mortgage purposes. A double whammy.

Good question petra my DD was questioned about whether she had student debt in a mortgage application but they didn't ask how much etc.

Having said that she has yet to earn enough to make any repayments.

I am sure eighteen year olds about to enter university this year are really concerned about the housing crisis.

Well no matter now, it's just a repeat of the train without an empty seat tale

Does student debt affect your credit rating?

As others have said "dealing with it" can include a number of different options. I would imagine one of the first issues to be considered by a Labour government would be the interest paid on loans, which was originally set at, I believe, 1.25%.

The Telegraph reported in April 2017:

"Students are facing a 33pc rise in the interest rates they accrue on their loans as a result of rising inflation......

" ..........Under rules introduced in 2012, annual interest of RPI plus 3pc is charged on student loans as they are built up while studying.

".... Based on inflation in March last year, interest is currently accruing at up to 4.6pc, meaning September’s rise will be equivalent to a 33pc increase.

"The latest increase to the interest rate means someone with a £40,000 debt would have to be paid just over £48,000 a year before they earned enough to pay off the loan rather than simply service the interest. Under the current rate, the same person would have had to earn £43,000."

In my view, the above demonstrates how ridiculously unrealistic it is to expect the majority of students to be able to pay off their substantial debts. This seems to be borne out by an article in the Financial Times in July 2016:

"About 70 per cent of students who left university last year are expected never to finish repaying their loans, according to modelling carried out by the Institute for Fiscal Studies.......

"This is in stark contrast to earlier generations of students. Of those who graduated in 2002, 44 per cent had already paid off their loan within 13 years, according to new data from the Student Loans Company.....

"This means that — for the 70 per cent of new graduates not expected to finish repaying — the loan repayments act more like an additional tax on their income above £21,000, which will last until they reach their early 50s....." ....

It must surely be a drain on morale and aspiration to be saddled with such huge debts. I would suggest that such a low degree of recovery indicates not only that the system is not working but that it is damaging the economic wellbeing and social cohesion of the country as a whole. I imagine that Corbyn has similar thoughts and saying he would deal with it may can be interpreted as he and his colleagues reaching a radical solution to this problem which, along with reducing the interest payable, might also mean reducing debts to a more manageable level, rather than scrapping them all together.

In any event, no undertaking was given to cancel debts and if some students who voted Labour did so purely on the issue of fees/loans and now feel they were misled, then presumably they won't vote Labour at the next election. It's up to them but I am cautiously optimistic that at least some of them will reflect on
what has happened since 2010 in relation to the education, health and justice systems and in relation to the housing crisis.

voxpoliticalonline.com/2017/07/23/next-time-someone-tells-you-jeremy-corbyn-promised-to-wipe-out-student-debt-show-them-this/

The video, to show you he did not promise to wipe out student debt, for those who think this thread is really about Corbyn's promise to wipe out student debt.
Annie says it isn't.

inews.co.uk/essentials/news/politics/ended-parliamentary-year-top-bottom-class/

Corbyn won over the year as whole, anyway.
Sorry, forgot again, this thread isn't about Corbyn.

What a lot of outrage at a non-promise and non-event.

So why can't it be written off? Because we can't afford it? Well the huge bribe to the DUP was affordable. And arguably writing it off would have a substantial saving involved as well, no admin fees, no paying debt collection agencies, no needing to keep track of people . It would also mean that graduates would have more money in their pockets and therefore could pay more in tax and afford bigger mortgages, so benefitting the economy.
Of course it would not please those who still think that a university education is a privilege and not a right, so would lose votes and therefore won't happen. But this idea that it isn't possible is ridiculous of course it is. Debts are written off every day when people go bankrupt, although interestingly the student loan can't be written off like that.

No, I do not detest him minesaprosecca, I voted for him in the first leadership election. I was really upset to discover he was a liar, that he betrayed the party and all I thought was genuine was false, so detest ? No, I just dislike dishonesty and dishonest people.

It's just as well he's demonstrated that he's as flakey as the next politician though isn't it? Wonder what his reception will be with the yoof when he bowls up at the next music festival? Possibly not so much adoration now that he's revealed he has feet of clay.