The Student Loans Trap

University fees and loans have been in the news recently. For what it's worth, I've decided to make my own small contribution to the debate, from a personal angle. Maybe it will help someone.

It's over ten years since I went to university, so some things have probably changed since then. I'm pretty sure it's not getting any cheaper, though.

To get into a particular university course, you need good grades in relevant A-level subjects. In other words I needed to know what my future career was going to be before the age of 14, when I chose what A-levels I took. While I'd learned many interesting things by the age of 14, I don't think I'd learned what I needed to know in order to make that decision. I knew almost nothing about politics and economics. But fear not, because at the time, teachers, careers advisers and parents all seemed to agree that while it was certainly preferable to strike out in a definite career direction, it didn't matter too much - a degree would open doors to a bright future, regardless of the subject.

By the end of my 3 years at university (and it was a generally useful experience and a lot of fun, I should point out), I had over £3,000 of student loan debt. But it wasn't really those loans that did the damage. The real damage was the culture of borrowing it created - of making it normal to accept loans to survive through a 'temporary' period of time, at the end of which it was expected that my shiny new degree would buy me a well-paying job and I would have no problems paying back the debt. Actually, 16 years later, I have never once earned a high enough wage to trigger the 'average wage' test that requires me to start paying back the loan.

Unfortunately, the level of grant and loans were set so low it made living on those funds near-impossible, or at least very uncomfortable, whilst pain-easing overdrafts and credit cards were easily available to students. By the time I left university, I had a £1,600 overdraft and a £3,000 Barclaycard balance.

After 3 years of independence, living with my parents again just didn't feel right, so I joined some of my old school friends and moved out to rented accommodation in the Midlands, and looked for work. Entering the real world, I discovered that my humanities degree did not immediately grant me a well-paying job, and instead found myself answering phones and stuffing envelopes alongside other recent graduates - and in one case, someone with a PhD. Nonetheless this £5 per hour agency temp job was all I needed to qualify for a small consolidation loan from my ever-helpful bank to mop up my overdraft (which was forcibly taken away by the bank) and credit card bill - and why not take a few hundred pounds more than you need and treat yourself? Why not indeed? thank you very much! After all, the crappy agency job was just temporary, and I'd soon have that dream job and the wage to cover it all. And a swanky new second-hand TV and VCR is just what I need to chase the blues away after spending 8 hours printing invoices and loading them into cardboard boxes. (Though this was quite the cushy job compared to what I did to raise money when I was a student - getting up at 5am to pick strawberries in the burning summer sun and cleaning hospital laundry covered in - if I was lucky - human blood).

As it turned out, the high-paying job was not just around the corner. Instead, over time, I slowly increased my wage, but never fast enough so that I didn't end up having to borrow just a little bit more to make ends meet or get those expensive car repairs done. So the borrowing grew, and the wages grew, but the borrowing was always one step ahead. Eventually I learned not to borrow more than I needed. Then I dropped the payment protection insurance. Then I stopped needing to borrow more, and concentrated on spreading the loan over a longer period of time and started paying it back in earnest.

This is how student debts can shackle a person to a treadmill for life. Since I was at university, grants have vanished altogether and the point at which a person must start repayments has dropped dramatically.

The good news was I learned my lesson and started seriously paying back my £20,000 debt. The bad news is that with a debt like that, there was no way I could afford to save for a deposit let alone get a mortgage, so I always had to rent accommodation. I once calculated that I had spent nearly £15,000 on rent in three years - all for the pleasure of some pretty shoddy accommodation whilst paying off someone else's mortgage on one small unit of their property empire. And I didn't even get my deposit back, despite scrubbing the place from top to bottom before I left.

The additional bad news is, that having paid off about half of my total debts of around £20,000, job evaluation hit the council I was working for and I rather foolishly took an active role in fighting the pay cuts, and encountered all the flak and stress that entails. Within a year, I resigned in exhaustion and disgust.

Today, I am once again forced to live with my parents - pretty embarrassing in my mid-thirties. I live on benefits, and can't afford to pay my debts any more. This means I have to put up with endless harassment from the banks and their debt collection people. I've lost count of the number times they've threatened to take me to court (I keep a detailed file on it all, of course, just in case they ever make the mistake of going through with it). The situation discourages me from re-joining the labour force and becoming 'economically active' again because the system is set up in such a way that a lot of any new wages I bring in will immediately vanish in the form of increased loan repayments.

The bank used to be so much friendlier back in the days when their (probably commission-earning) representatives used to help me fill in my budget evaluation sheet (because banks have to be 'responsible lenders', you see, so they have to 'check' you can 'afford' the loan.)

Given the compensation people got for being mis-sold pensions, shouldn't there be something for people who were mis-sold loans? That might be a just use of all that capital that the banks are currently being forced to accumulate - and not only would it help out people who got shafted by banks, it would also boost the economy. I've got dental work, car repairs, PC hardware and various other things all backing up, all waiting for some disposable income to come my way. I also owe the tax man a few quid and I hear the government is a bit strapped for cash at the moment - wouldn't the government prefer that they get my income, rather than the banks?*

*That said, any actions that might reduce banks' share prices will delay the point where the government can sell off their shares in the banks at a profit, so it's swings and roundabouts. That said, I doubt it would delay it beyond year 4 of the current parliament, which (judging by their budget forecasts) seems to be the point where the coalition is aiming to break out the happy times again before the next election.

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