Practical Dad

College Debt:  The UK And a Look Ahead

The toxic college debt meme is spreading and if you want a glimpse of what's liable to happen here, consider the situation in the UK.  As you may be aware, the UK is one of multiple European countries that are looking at grim economic times in the next several decades and the new coalition government is taking steps to lay out new austerity measures.  While the figures are still nebulous, the prospect is that the size of the UK national debt will require up to 20% cuts in many programs, if not all of them.  And financing of higher education is one of the programs on the table.

A few words about the UK university system.  The universities there are largely under the purview of a Universities Minister within the government, who in this case is David Willetts.  Like the US, many of the students will borrow to finance their education and the average English University graduate will leave with a debt owed of about 22,000 Pounds (almost $32,000 at an exchange rate of $1.45).  Much of the money comes from public funding and unlike the US, repayment isn't required until the graduate is employed and has an annual income of at least 15,000 Pounds (almost $22,000 at the same exchange rate).  With job prospects amongst young people much poorer than their older countrymen, that means that a significant amount of debt is simply being carried without repayment until the student is several years older and no cash flow back to a starving national treasury.

The upshot is a series of moves - and corresponding comments - from the UK Universities Minister that are best likened to a bushwhacking of unaware students unprepared for the real world about to be unleashed on them.  The first and obvious move is discussion of a rise in annual university fees.  Yes, being essentially part of European society, there is an English National Union of Students which opposes the increase; and being English and students, they'll probably find their voice in a series of riots. 

The other aspect is a structural changes that are really more daunting.  First is the suggestion that English teenagers place a greater emphasis upon entry into an apprenticeship program with practical training.  If they continue and do well, then an actual degree could be considered.  The article provides the example of entry into an apprentice position with British Telecom followed later by a possible degree in Electrical Engineering.  The problem with that is the question of just how many hands-on positions there are in the English economy to support the masses of young people who would want such a position.  What exactly does England do and make anymore?

Comments made by Willetts indicate another major institutional change.  As Willetts first stated, public funding of student higher education is a "burden on the taxpayer that had to be tackled."  The common view for years has been that the public should help pay for a youngster's education, akin to it takes a village to raise a child on a larger scale.  But in the new austerity, the government and culture will shift its view to one that again places the bulk of the educational onus back onto the family.  This paradigm shift back to the individual is reinforced by Willetts' other comment that "the so-called debt (students) have is more like an obligation to pay a higher income tax."  So we'll no longer call it debt but instead consider it as something to be paid for the added benefit of an education.  Regardless of whether or not that value-added education actually leads to higher income.  The response of the young president-elect of the National Union of Students, Aaron Porter, was that it "very much felt like debt to them." 

The situation is a microcosm of the coming debates on the role of higher education and how to pay for it.  The comments section contained a succinct summation of the position in which English teens and young adults find themselves.  "Kibblesworth" writes:

And it's all very well urging everyone to go into apprenticeship now - but the fact is that schools, for the last 13 years, have pretty much based their goals on getting their students to pass exams to get into uni.  No real skills are taught...We were constantly told that uni was the only way we were ever going to get a decent job.  Many of us have applied - and many more have taken out student loans already.

The reality is that this view has been promulgated for more than 13 years, but it's been about that long to the young Kibblesworth. 

Our job is to prepare our children for their adulthood and our real influence should last greater than the years that we are their legal guardians.  Times are changing and we have an obligation to both understand the present circumstances and speak frankly and honestly to them about what they should expect and how to enter their adult world prepared to survive and prosper.

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