Is student debt real or is it just a graduate tax?
Keeping in line with the October edition of the newspaper, I thought that I would share my thoughts about student loans with you.
Whilst surfing the web about the system which I will soon have to take part in, I came across some wonderful facts- the most important of which are these.
Firstly, there are an estimated 3.3 million outstanding student loans, each one averaging around the £17,500 mark (that’s £57,750,000,000 of debt); and we only pay 9% on anything that we earn over 15k after we graduate – this sounds like a lot but in a 16k job, you would only pay £90 for the year- that’s pretty slim to be fair.
When looking at the maths, it occurred to me, most people will not even remotely cover their loans in the time we are to pay it back. Think it through logically. Say you earn £500,000 in your job after graduating over the 25years that you have to pay back your debt (which would average at 20k a year), you would pay £11,250 towards your loans, resulting in a £6,250 loss for the government.
Furthermore, I happen to know that, in a £26k a year job, the interest per year is higher than you pay back, because a relative is in that situation. So in reality, most of us are just never going to pay everything back. Ever.
Not only that, but in the economic climate that we are seeing right now, numerous graduates aren’t even breaking the 16k barrier, leaving the government in even more debt than it is already in, and yet the percentage we pay has not increased to accommodate that.
Why is that? Well I think it’s pretty simple: we are paying a graduate tax. Since the days the media started reporting what the government got up to, they have been attempting to conceal taxes. When the words ‘tax’ and ‘increase’ go together, votes are almost instantaneously lost.
So what I am trying to tell you all is this: don’t worry about any massive increase in student debt, because at the end of the day, when we break it down to the basic level, after graduating, we pay a concealed tax to the government for the use of the higher education system – which, I believe, is why student debt is not considered real debt when you get credit checked. So, be happy, we’re not really in debt after all.
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