Student debt and loans have long been a problem not jusin the United States, but all over the world. England is no exception. With rising college costs, student debt grows. Some studies now suggest that students may still be paying back their student debt until well into their fifties, reports The Telegrah.
In England, college tuition has been maximized at £9,000 ($15,000) in 2012. This is triple the previous cap of £3,000, according to The Telegraph. Students do not begin making payments on their student loans until after graduation and they are bringing in twenty one thousand pounds at the very least a year, at a rate of 9 per cent of all income above this threshold. The income cap was fifteen thousand seven hundred and ninety-five pounds in 2012 under the old way of doing things. Student loan debts are invalid after thirty years.
Researchers at the Institute for Fiscal Studies did a study concerning the matter of student loan debt. According to Katherine Sellgren of the BBC News, the study discovered that a normal pupil will now finish college with over £44,000 of debt from fee and maintenance student loans. This is before the accruing of interest after graduation. This £44,000 figure is around £20,000 more than they would have had under the old way of doing things. most of the reason for this rise in costs is because students are borrowing more to cover rising university fees.
Some, however, may never pay their debt off. As previously stated, after 30 years, the debt is written off. In the old system, debts were written off after 25 years. Sellgren writes:
“We estimate that 73% will have some debt written off at the end of the repayment period, compared with 32% under the old system. The average amount written off will be substantial – about £30,000.”
Under the new system, those with higher salaries pay back more in student debt than those with lower. On the lower end of the scale, the students who’s salaries rarely go above twenty-one thousand pounds will be paying back less of their debt under the new system, while higher paid individuals will be paying back more, reports Sellgren.
Holly Baxton for The Guardian insists that the people of her generation are becoming to see debt as a fact of life an unavoidable. Many are so used to having debt that they do not know what it is like not to have it. Others see it as a “college tax” that they have to pay monthly.
Baxton also discusses the growing wedge between rich and poor students. Richer students’ parents pay their college bill for them because they do not want their children to start out in debt. Poorer students have little choice but to take out college loans and start in debt.
“But rich parents haven’t stopped paying their kids through college; anecdotally, it seems they’ve increased. “I’d rather not have my child start out in debt,” is the common explanation given as relatives dole out their inheritances early. And so the wedge between rich and poor becomes wider, with a renewed longevity.”