18/07/2017 3/4 UK Graduates Will Never Repay Student Loans | Zero Hedge

3/4 UK Graduates Will Never Repay Student Loans

by Tyler Durden
Jul 18, 2017 12:30 AM

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With tuition costs rising more than twice as quickly as consumer prices, a generation of recent college graduates are struggling
to strike out on their own, burdened by a $1.4 trillion pile of debt that ineligible to be erased by the tonic of bankruptcy
protection. Tuition costs have been blamed for nearly all of the ills facing the millennial generation. The rate at which recent
graduates are moving back homme with mom and dad has never been higher, with nearly a third retreating back to the
basement as they struggle to jobs with adequate pay. Household formation rate have plummeted as women put of childbirth.
Meanwhile, those who have made it out are clustering in popular urba like NYC, San Francisco or DC where theyre spending
more than 50% of their income on rent.
Theres no question that US graduates have it rough, but a recent study by the UK-based Institute for Fiscal Studies suggests
that students in the UK are facing obstacles thatre even more overwhelming than their peers in the US. As the Financial Times
reported earlier this month, Three-quarters of UK university leavers will never pay off their student loans, even if they are still
contributing in their 50s.
This means the UK government will have to write off some or all of the debt taken out by 77% of students because they
will not earn enough to repay their loans within 30 years of graduating, according to the study, which was written up in
the Financial Times.

The study amounts to more unwelcome news for the UK college students, who will soon contend with an interest-rate increase
of more than a third, to an annualized 6.1%, slated for September. That increase, experts say, is a byproduct of the UKs
decision to leave the European Union - a decision that resulted in a more than 10% drop in the British pounds value relative to
the dollar and euro, according to the Guardian.

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Graduates in England were saddled with the highest student debt in the developed world, the IFS said, adding that the
benefits of earlier reforms to the tuition fee system which took pressure off the lowest-earning students had been
wiped out by subsequent changes such as the replacement of maintenance grants with loans.

The IFS said that because graduates repaid their student loans at 9 per cent of their earnings, above a certain threshold,
and over a 30-year period, in many cases interest accrued on their debt too fast for repayments to keep up.

One key finding is that because interest rates on student debt are very high up to 3 per cent above RPI the
average student accrues 5,800 of interest while studying, meaning they borrow 45,000 but have a debt of
50,800 on the day of graduation.

By contrast, the average debt burden on students in the US is far lower at $36,000 (27,900), even though the cost
of tuition varies far more at US institutions.

Financial researher researcher Martin Lewis, who runs his own personal-finance website moneysavingexpert.com, says
he has been swamped by UK graduates terrified by new statements that show their debt spiraling in size after interest
is added later this year, he told the Guardian.

Many graduates are starting to panic. First they look in shock at their student loan statements after noticing interest
totalling thousands has been added. Then they read the headline interest rate for the 2017-18 academic year will increase
from 4.6% to 6.1%. Its no surprise Ive been swamped with people asking if they should be trying to overpay the loans to
reduce the interest.

Counterintuitively, Lewis warns these graduates that theres little benefit in paying off their loans early thanks to a government
program that will pay off the remaining balance after 30 years. Only if the student lands a job earning 40,000 a year on
graduation, and then enjoys big pay rises after, should they consider repaying their loan early, says Lewis. Heres why:

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A graduate earning 36,000 a year will repay 40,500 of a 55,000 total student loan over 30 years, said Lewis, at the
current repayment rates. The remaining debt will be wiped clean after 30 years. If the same graduate cuts the total 55,000
balance to 45,000 with an overpayment of 10,000, they will still have to repay the same amount of student loan over 30
years, making the overpayment entirely pointless.
Just like in the US, student-loan debt in the UK has been soaring. Its total value rose above 100 billion ($131 billion) for the
first time earlier this year, according to figures released by the Student Loans Company.

Lewis says students might as well rip up their loan statements and just accept the fact that they will be paying a tax equivalent
to 9% of their income above 21,000, thanks to a UK government program ostensibly meant to assuage the student-loan
hysteria by spreading around the cost of debt repayments.
"'For most university leavers, the student loan is a misnomer it should be renamed the more accurate term: a graduate
contribution system. That doesnt mean its cheap or fair, simply that people would make better financial decisions if they
focus on the fact theyll have to pay the equivalent of 9% extra tax above 21,000 for 30 years,' Lewis said.

As the FT notes, the 2012 reforms, carried out by David Cameron and Nick Clegg, tripled tuition fees to 9,000 and increased
average university funding by a quarter. But the majority of the cost rises were borne by richer graduates, resulting in the
lowest-earning third of graduates benefiting by an average of 1,500.

Recent reforms have eroded this advantage: cutting maintenance grants has reduced the government deficit but meant students
from low-income families are graduating with the highest debt levels, often over 57,000.

Laura van der Erve, one of the reports authors, said told the FT that universities are undoubtedly better off under the current
system than they were before the 2012 reforms. But she warned that the changes had shifted incentives towards institutions
offering low-cost arts and humanities courses, which now attract 47 per cent more income per student than they did in 2011. By
contrast, the highest-cost subjects only attract 6 per cent_more income. This does not sit comfortably with the
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contrast, the highest-cost subjects only attract 6 per cent_more income. This does not sit comfortably with the
governments intention to promote typically high-cost [science, technology, engineering and maths] subjects, she said.
Intensifying student-debt burdens have been blamed for helping Labour leader Jeremy Corbyn won support from a swath of
young voters on the back of his election promise to abolish 9,250 annual tuition fees altogether.

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One Conservative heavyweight noted the most pressing issue related to college costs: The question of whether these costly
educations represent an adequate value for students. One study in the US revealed that graduates at large state flagship
universities are often leaving college with worse cognitive skills than they had upon enrolling.

Damian Green, the Conservatives first secretary of state, told the FT earlier this month that the debt burden on young
people was clearly a huge issue and something his party would have to address. I think in the long term weve got to
show that [students] are getting value for the money, he said.

Even liberal politicians criticized the governments plan to focus student debt reforms on percentages and interest rates.

Responding to the research Sarah Stevens, head of policy at the Russell Group, said that increased undergraduate fees
have been crucial to universities at a time of cuts to government teaching grants. She suggested that in order to make
higher education more affordable for students, ministers should address concerns over the interest rates applied to loans.

Nick Hillman, director of the Higher Education Policy Institute, agreed that issues such as interest rates, repayment
thresholds and the period allowed for repayment affect graduates far more than the sticker price of university courses,
which receive far more political attention.

The debate about fee levels is a bit of a red herring because what matters is what you are paying back later, he said. The
point at which you feel it in your pocket is when youre in your 30s, with a mortgage and childcare costs, and 9 per cent of
your salary above a certain threshold is going to pay back your student loan.

Judging by the IFS report, and other the recent warnings about the metastasizing consumer-debt crisis issued by the BOE, most
contemporary students and recent graduates will be feeling this burden until theyre just about ready to retire. Lets hope, for
their sakes, that they can find some way to afford it.

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D Nyle Jul 18, 2017 12:37 AM

Debt Slaves for Life, the next New World Order

J S Bach D Nyle Jul 18, 2017 1:04 AM

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How can all of these "scholars" be so unfit to repay their meager college tuitions? They're obviously so gifted as to
make the point moot.

wee-weed up J S Bach Jul 18, 2017 1:43 AM

Such a tragedy...

Lib Globalism...
Fucking over young naive students in every country...

Whilst indoctrinating them into their failing cause...

So sad.

jimmy c korn wee-weed up Jul 18, 2017 2:57 AM

3/4 of UK graduates will never find a job. They've been taken by illiterate arab immigrants.

Dj view jimmy c korn Jul 18, 2017 3:09 AM

Defacto 'FREE' university...same across pond...
Margret...when do other peoples money run out?
Wait Until Hell Freezes...for an answer...

rado_watching Dj view Jul 18, 2017 8:04 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can
make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...
www.jobproplan.com

Know shit rado_watching Jul 18, 2017 2:25 PM

Man think BIGGER.

I have been loosing $7k a day with my btc investment.

Sorry latest update:
Just checked it I'm back in the green numbers.

Take care.

Agstacker jimmy c korn Jul 18, 2017 8:06 AM

And the jobs in the US are taken by Mexicans.

https://www.reddit.com/r/The_Donald/comments/6n8mdq/john_legal_vs_juan_i...

uhland62 J S Bach Jul 18, 2017 2:40 AM

It's more like employers not wanting to pay reasonable wages and entrepreneurship stifled because all niches are
occupied by multinational global companies.

ludwigvmises uhland62 Jul 18, 2017 6:30 AM

"All niches" were always occupied by multinational global companies. This is nothing new. It takes young companies
to disrupt those incumbents and their markets. It's happening all the time in economic history.

PT uhland62 Jul 18, 2017 10:09 AM

The money printers DO NOT CARE if the debt is never repaid. That was the whole idea. They DON'T NEED the
money. They just print moar whenever they want it. What they wanted was DEBT SLAVERY FOR THE MASSES. And
that is what they got in return for printing some more ones and zeroes.
Debt slave or starve. Your choice. ... and it woz all legit becoz it was a "free market" transaction ... he he he ...

The plebs were dumb enough to let it happen. The slave owners were happy enough to make it happen.
"Bail outs! Bail outs! Get yer free bail outs here!" - and don't forget to read the fine print.

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Michael Musashi D Nyle Jul 18, 2017 1:24 AM

The potential lifetime of brainwashing is worth it!!!

1. Individuals bad.
2. Collectivists good.

3. Males bad.

4. Females good.

5. Straight sex bad.

6. Queer sex good.

7. Rural bad.
8. Urban good.

9. Driving bad.
10. Passenger(s) good.

11. Guns bad.

12. Submissive good.

13. Independent science bad.

14. Dependent science good.

15, Confidence bad.

16. Fear good.

17. Marijuana bad.

18. Pharmaceuticals good.

19. Success bad.

20. Abortion good.

21, Community bad.

22. State good,

And so on, and so on, and so on... education for all!!!!

Panic Mode Michael Musashi Jul 18, 2017 3:49 AM

You miss a few.

23. Saving bad

24. Debt good

25. Real news bad

26. Fake news good

27. Profit bad

28. Free good

slvrizgold Panic Mode Jul 18, 2017 9:06 AM

White people bad
"People of color" good
At the grocery store checkout line the other day, there was a big glossy Anne Frank commemerativel magazine for
sale next to the tabloids, and the feminist gossip rags written by gay Bolshevik men. These "Cultural Marxists"
will go to any lengths to pollute us with their garbage and lies.

Son of Loki Jul 18, 2017 12:37 AM

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Son of Loki Jul 18, 2017 12:37 AM
It's a taxpyer freaking subsidy to professors and uni administrators.

Needs to stop. Let the universities loan the money to the students and also responsible for any losses and /or
possible gains. It's their business, not mind so don't get me involved by putting me (a taxpyer) on the hook for their
business. No one bails me out if I fail.

meditate_vigorously Son of Loki Jul 18, 2017 1:26 AM

It is all administration and wasteful spending. Professors pay is quite reasonable considering the competitiveness and
the advanced degrees.
Presidents/CEOs of Unis could use a pay axe for sure. None of them provide value commensurate with their ludicrous
(often 7 figures) salaries.

order66 Jul 18, 2017 12:37 AM

Earn 60% more over your lifetime than high school graduates. #fact

ebworthen Jul 18, 2017 12:44 AM

It's the same circle-jerk here in the U.S.; fund campuses with phony money, keep the liberal propaganda hive mind
palaces humming, ignore or write off the debt.

Of course here in the U.S. now that we have "independence" we don't have a 30 year limit, oh no, beyond the grave
for collecting the debt!

$11 Trillion for the banks/corporations/insurers? No problem!

$100K + for Ivy League sheepskin?
Get the cash from Grandma!

OverTheHedge ebworthen Jul 18, 2017 1:07 AM

I've always looked at student loans as a form of stealth quantitative easing: a way to flood the economy with cash
that doesn't look like helicopter money. Every year there will be more graduates with unrepayable debt, so there will
be a larger pool of prospective voters who will vote for Jeremy Corbyn's offer to wipe out the loans. Soon, it will
happen, and then it will have been true helicopter money. Next up, the Universal Basic Income, also known as
Helicopter Money.

Good old Ben: he knew what he was talking about.

GreatUncle OverTheHedge Jul 18, 2017 5:07 AM

Never works ... you will sow unreset though.
These students are of the ilk everything is free so they have to be thrown loads of money to make it happen.

I prefer not to spend and even now use all tax evasion so I don't have to pay for their shit.
On the grounds they get handouts and I fucking do not!
The handouts are selective groups only.

In the UK immigrants get it ordinary natives paying for it do not.

truthalwayswinsout Jul 18, 2017 12:48 AM

All that needs to be done is to stop student loans. Overnight most of the schools will go bankrupt and tuition will
fall by 90%.

Either that or create hard as hell online schools where everything is free except the cost to take the exams. Costs
would go to $100 to $400 per exam. Students would have to work part time as part of the experience. No one
would need a loan to go to school.
I looked into helping my son go to MBA school and they want $100K per year. I sat with my son and said if I give
him $200K and he doesn't go to school and just invests it and the money he makes working during the two years, he
can stop working in 20 years with about $5 million U.S. in the bank.

DeeZ_nutZ truthalwayswinsout Jul 18, 2017 1:53 AM

no shit.... buy gold, i suppose?

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Yen Cross Jul 18, 2017 1:00 AM

At least we're not piking alone in the USSA?

Golden Showers Jul 18, 2017 1:00 AM

This is all well and good.
Could someone explain to me how the X Men are not called the XY Men?
I mean, it's simple enough: Males are XY. But then there's the XMen. So... is the mutation passed down from
mommy?
Oh, I went to school too, but, um, I learned all I needed to know by interviewing professors at office hours and
drinking with them on Friday afternoons. Most of the time my drinks were free like my education. Someone would
punch me in the academic face for being a moron and ten years later it blows up. Gotta hand it to historians. They
know what they say is a lie and they hold on for dear life being subtle.
Otherwise, you have x men. It's a sort of tease. A contradiction. A fantasy.

Save the males!

pitz Golden Showers Jul 18, 2017 3:13 AM

What about C-Men? Seems to me there far too many G-men around these days though.

navy62802 Jul 18, 2017 1:13 AM

This shit will be written off, one way or another. Those of us who were smart enough to avoid the debt will bear the
burden as we are forced to be good little socialists by the strong arm of the government. There will be no recourse for
those who made good decisions. Instead, you will be forced to pay into a corrupt system and line the pockets of the
banks and corrupt politicians who created the legislation. At least in the US, the citizens can still legally be armed,
even if our vote is worthless.

sinbad2 Jul 18, 2017 1:25 AM

"With tuition costs rising more than twice as quickly as consumer prices"

It's called inflation, it's everywhere, but Governments like to pretend that their rampant money printing hasn't
caused any inflation.
What it really means, is paper money is becoming worthless.

uhland62 sinbad2 Jul 18, 2017 2:37 AM

It's monopoly money on the credit card. Like all houses built from cards, it will tumble.

darteaus Jul 18, 2017 1:32 AM

Hey Trump: Stick the Universities with the bad debt!
They admit the unqualified, overcharge them and give them a WORTHLESS degrees from BS spewing America haters.

Screw them and their MASSIVE endowments; they all hate you anyway.

DeeZ_nutZ Jul 18, 2017 1:52 AM

white british bitches should spread their legs and gladly accept dirty sperm from the uneducated hoards imported
by the government. after popping couple bastards they can quit their jobs or whatever the fuck they are doing and
get on the welfare and spend the rest of their lives living happily and nonchalantly. mixed race kids are more
welcome by social support office than freckle faced pieces of human shit, you know. oh, and debt will just be
forgiven.

and if they ever run out of money, repeat step one as many time as necessary.
debt is for pussies and pussies are for muslims!

now, what happens to the white dudes, you might ask? well, fuck them in the ass because they are no longer dudes,
but rather cucks and dick sucking metrosexuals. they should pay for the welfare and shut the fuck up!

JailBanksters Jul 18, 2017 2:32 AM

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If your from the poor side of the Track, you won't be able to get a loan to not be able pay it back.

But if your from the rich side of the Track, you get a loan and don't have to pay it back.
This ensures the Poor stay on that side of the Track.

Colonel JailBanksters Jul 18, 2017 3:46 AM

The satanic fed/.gov did the same for the banksters. Bailed out the Wall St. and screwed over Main St.

GreatUncle JailBanksters Jul 18, 2017 5:04 AM

+1 See there is a use for all that liquidity they freshly print for themselves every day.

Panic Mode Jul 18, 2017 3:53 AM

People don't have the brain to see universities turned the education into pure profit no risk business and yet they
think they are smart enough to get a degree??

BritBob Jul 18, 2017 4:18 AM

But didn't Corbyn's Labour party say that they would cancel all student debt? Stange man. Strange friends, strange
ideas....
Corbyn and the Falklands - Alicia Castro said regarding Corbyn: "In the end, he is one of 'ours'. Even today, when he
comes to our embassy, he arrives with the same bicycle and the same enthusiasm. He is a friendly person with a
sense humour, who knows how to listen." Alicia Castro, Argentinian ambassador quoted in Daily Telegraph 14 Sept
2015.
I understand that Mr. Corbyn favours a sovereignty share deal. Funny thing is, Argentina has never legally owned the
islands. Falklands- Never Belonged to Argentina (single page):

https://www.academia.edu/31111843/Falklands_Never_Belonged_to_Argentina

paddyirishman BritBob Jul 18, 2017 5:44 AM

correction bob it's not the falklands it;s las Malvines and they belong to Argentina.

GreatUncle Jul 18, 2017 5:03 AM

They will bust the system at some point for if they do not then they lose all power.
The logic if you follow it through is and this student loan farce is all part of it.

This started under Major and the Conservatives decades ago.

Then Labour came along and explited it like the socialists believing it can all be free.
The cycle is reaching its end now though for the need to pay interest on this debt

"watch this logic"

Necessitiates the need to cut elsewhere from you expenditure to repay the deby.

So therefore this debt fuelled binge now starts to drive deflation

All that wants to be sold can only be sold if the price falls.
YOU JUST LOCKED IN DEFLATION FOR DECADES.
Now those without debt seeing this decide not to spend also.

Forcing the CB's with less growth use forced inflation upon the population.
NOW YOU LOCKED IN THOSE WITHOUT DEBT ALSO TO TRY NOT TO SPEND WITH FORCED INFLATION.
Doubled down on the mechanism now locks you into the cycle that you can only get out of

BY GOING BUST AND IF YOU REFUSE THAT (2008) YOU END UP LIKE JAPAN.

It is one thing for a government to not repay its debt (that's the slavery) but a whole other matter if the slave have to
repay.
We are there ...

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CRM114 Jul 18, 2017 5:43 AM

I don't understand it.
You open the paper and there are scores of high-paying jobs out there for graduates with degrees in Multicultural
Gender Studies with a minor in Elephant Shit Art.
Are these dumb-f#ck kids still all studying Engineering??

EEEEEEEEEEE Jul 18, 2017 6:52 AM

haaaahaaaaaaaaaaaa
kikes who run education system have stolen all of your childrens (your tax money) loans AND THEY WILL NEVER PAY
IT BACK WHILE BLAMING YOUR CHILDREN
and your children now got a useless degree worth nothing becuase everyone has now a useless degree worth
nothing

jmack Jul 18, 2017 8:26 AM

And what percentage of those 3/4 will be economics majors?

Catullus Jul 18, 2017 8:47 AM

"...imply that people would make better financial decisions if they focus on the fact theyll have to pay the
equivalent of 9% extra tax above 21,000 for 30 years"
That's what Student Loans in the US are. They're tax riders. And since you owe the Feds and can't discharge the
debt, it really is just another tax

aliens is here Jul 18, 2017 8:48 AM

The girl in the picture is cute. She can be a high priced escort in DC to pay off her loans.

J J Pettigrew Jul 18, 2017 8:50 AM

Nothing more than an indirect GIFT to the left wing professorships and administrators who OVERCHARGE for the
dispensing of
what passes for knowledge........a dispensing that should be near the cost of ZERO....

Subsidization of prices that, without the loan mechanism, could never be supported at so lofty a level.

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