COMMENTING on a report from the Student Loan Company (SLC) on Monday, National Union of Students (NUS) President Gemma Tumelty said: ‘Fee loans, along with levels of borrowing for living expenses, have now ratcheted up typical graduate debts to a massive £30,000.’
She warned: ‘Debt does not only affect students’ choices before they enter university, it affects the courses they choose, the career they take on, the likelihood of them pursuing further study, and their chances to save and invest as graduates.’
The SLC revealed that the total lending in the financial year up to April 2007 was £3.4bn as against £2.9bn in the previous year. This was largely due to the fact that university tuition fees went up from £1,250 to £3,000 in September 2006.
The total debt owed by students to the SLC, which receives its funds from the government, is £18bn. It has also been reported that the government is considering selling on this debt to commercial banks.
Graduates leaving university with £30,000 of debt to the SLC face the prospect of finding a job and a place to live. The first chunk of their salary, if it is more than £15,000 a year, will be taken to repay their student loan.
With such a huge debt, buying a place to live becomes almost impossible because that means getting a mortgage loan.
News this week on that front too is bleak. The Council of Mortgage Lenders has reported that in April first-time buyers paid 18.7 per cent of their income on mortgage payments, while those moving house paid 16.3 per cent.
Not since 1992 have those buying a home had to pay such a large proportion of their income to repay mortgage debt and that was at the end of the last major house price crash of the late 1980s.
Many families cannot keep up with their debt repayments and bankruptcies are at record levels. According to the Citizens Advice Bureaus there has been a 20 per cent increase in the number of people seeking help with their housing debts.
It is not just students and those trying to find a home, now that council housing building has been axed by the government, who are being hit by ever increasing debts.
The Labour government has also mortgaged the future of essential public services, like education and the National Health Service (NHS), with its programme of building schools and hospitals through the Private Finance Initiative (PFI).
Chancellor Gordon Brown has given the go-ahead to PFI schemes worth about £100bn, forcing schools and hospitals to cut services to fund contracts entered into with these speculative private developers.
BBC Radio Four’s File on Four programme on Tuesday reported cases where schools are being closed, yet local education committees are committed to paying for PFI contracts for these schools for many years. NHS hospitals are cutting patient services to pay millions to PFI speculators.
Now the situation is about to get much worse, because the Governor of the Bank of England (BoE), Mervyn King, is talking of increasing its base rate, from 5.5 per cent to 5.75 per cent.
On Monday King said: ‘If these indicators (consumer and business spending, and money supply growth) remain elevated the MPC (BoE Monetary Policy Committee) may need to take further action.’
Higher interest rates will mean more bankruptcies, as a result of the level of personal indebtedness, and the prospects of a major housing market crash.
British capitalism has only continued on tick and now it is pay-back time. This is the legacy of the Labour government and its Chancellor Gordon Brown!
The lives of millions of people, particularly the younger generation, are being devastated by debt and they are threatened with catastrophe as interest rates go up.
It is time the working class, organised in a seven-million strong trade union movement within the Trades Union Congress, took mass strike action to bring down this government and replace it with a workers government. British capitalism has to be overthrown.
A workers government must nationalise the banks and major corporations, cancel student and household mortgage debts, and return all public services to state ownership in order to restore the NHS and provide universal free education.
