The credit crunch for students

 By Edmund Brown

scottish-parliamentThe credit crunch has affected all social groups and students are no exception. Young people going to university today can expect to leave with a debt of around £26,000 with the majority of this owed in overdraft and credit card facilities given to them by the now under pressure banks.

Banks are therefore going to reform who they give money to after the government rescued them with handouts and as a result students are going to be affected by this more than most. If the banks do not give the same amount of money as they have done in the past, students will need to work more hours in part time jobs to survive. This will result in pressures from universities as students course work will suffer. The number of students who will drop out of courses will increase and surely result in universities reputation being in doubt. I put this to a Scottish Government spokesman who disagreed saying “ There will always be some students who are unable to complete their course but we do not foresee any significant change in these numbers. There is currently a very healthy demand for college places and we envisage that will continue.”

 Students also borrow money from The Student Loans Company which gets paid back through their wages after finishing their courses. The repayment plan, however, only gets paid back when the student earns £15,000 or more. Statistics that have been released show that a third of the students who have had student loans have never paid anything back as a result of not earning enough money. It will therefore have a knock on effect for future students in years to come as government money will run out. The spokesman for the government said; “The financial implications are that these debts remain outstanding for longer with a greater likelihood of the debt not being paid back at all, resulting in greater costs to the government. The Scottish Government’s funding is of course not limitless and any additional costs can result in less resources being available in the future.”

This contradicts previous information given by the same spokesman who advised that the Scottish Government have provisionally put money aside to give students grants whilst at university instead of the current loans system. These grants will be given to part time students at first before being fully implemented in 2011. The Scottish Government did say they support the need for young people to experience further education regardless of the financial cost. They stated; “The Scottish Government believes that access to higher education should be based on the ability to learn, not the ability to pay.”

There is still a high level of uncertainly when deciding whether to go to university as financial worries are at the forefront of the minds of these families. Whether the government can ease that worry, we will have to wait and see.