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Students Saddled With Rising Debts

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Students saddled with rising debts

The Student Loans Company lent £4.2 billion in 2008/09, up 7.6 per cent from £3.9 billion the previous year.

Overall, students and graduates owe almost £26 billion in outstanding loans, including those not yet due for repayment.

The Government said the rise was to be expected as more students enter higher education.

Liberal Democrat universities spokesman Stephen Williams said: "This Government has saddled graduates with billions of pounds of debt. As a result, students leaving university this year will have built up mountains of debt just as they enter an extremely tough job market.

"It is alarming to see many universities now gearing up to push for fees to be raised later this year.

"Tuition fees must be scrapped altogether. Students from all backgrounds should be able to go to university without having thousands of pounds of debt hanging over their heads after they graduate."

A spokeswoman for the Department for Business, Innovation and Skills said: "The increased amount outstanding on student loans is to be expected as the system matures and more students go into higher education.

"We are committed to ensuring that those who want to succeed are supported by a generous package of loans and bursaries.

"Student loans are not like commercial loans, they offer low repayment rates and graduates only pay back the April after they graduate and once they are earning more than £15,000 a year."

The figures, released yesterday, will fuel the debate over top-up tuition fees.

Fees currently stand at just over £3,000 per year, and ministers are due to begin a review of the cap this year.

A Universities UK report published in March found that by 2016, a graduate's average debt would be £26,400 if fees were raised to £5,000.

Universities have been pressing for more money in order to meet rising costs in the higher education sector.

Earlier this week Professor Paul Wellings, chair-elect of the 1994 Group, which represents 18 research universities, suggested tuition fees should be higher.

He said ministers must make a choice between reducing student numbers, or increasing funding for universities.

He also proposed a higher interest rate for student loans.

Ok, so England is going to lay the boots to all the unemployed graduates....meanwhile...

debt-ridden young Scots find slump good for bank balance /Students to save £80m as loan rate is cut to 0%

The recession will save thousands of debt-laden Scots over £80million in the next year as the interest rate on student loans falls to 0% for the first time.

Students are benefiting from an unprecedented set of economic factors.

From September, interest on the £2.2billion now owed by people who went into debt to fund their studies at universities and colleges will be cut from 3.8% to zero.

The Student Loans Company has refused to set a rate for the next financial year because its formula would have meant students actually receiving money instead.

The rates are set using a UK Government equation based on the retail price index (RPI) for March of the previous year. The current rate on student loans is based on the RPI for March 2008.

However, a widespread lowering of prices by shops in March this year forced the RPI down to -0.4%, which would have resulted in the body paying out more than £8million to students.

But a legal loophole allows the loans company to set no interest rate – which makes it 0% by default from September 1 until August 31, 2010.

Student debt in Scotland reached a record £2,227,000,000 at the end of the last financial year, according to figures released yesterday, and the interest-rate cut will save them more than £83million in the next year.

The average student north of the border now owes £5,765 and the rate cut will save them about £220.

The SLC will have to pay out to some students who took out mortgage-style loans before 1998 that directly track the RPI. Borrowers will save money in interest but their monthly repayments will be unaffected as they pay 9% of what they earn over £15,000 every year regardless of the interest rate.

NUS Scotland president Gurjit Singh said the “incredible†amount saved by students would come as a huge relief to the thousands struggling to deal with the recession. He said: “We are just glad that the government has taken on our concerns about the impact the economic downturn is having on students and graduates.

“To have the local interest rate set at zero is fantastic news – and graduates repaying their loans around Scotland will be delighted.â€

Despite the cash boost, figures released by the Scottish Government and the SLC showed that the £2.2billion still to be repaid was the highest amount yet and 9% more than the previous year.

However, the amount of money loaned to students by the SLC last year fell.

The figures revealed that students in higher education received £191.3million during 2008-09 – 10% lower than in the previous year.

The amount loaned to students to pay their graduate endowment is 81% lower than in 2007-08 following Scottish Government legislation to abolish the charge.

Education Secretary Fiona Hyslop said: “In relation to the outstanding balance, the vast majority of this – 83%, or £1.8billion – was built up under previous administrations, with the total outstanding balance covering all outstanding amounts since student loans were introduced.

“Our priority is to reduce this student debt at source through the policies we are introducing to tackle hardship and improve student support.â€

Ms Hyslop said the SNP government had restored the principle of free education in Scotland with the abolition of the graduate endowment fee.

She added: “We welcome the fact that today’s SLC figures show an 81% decrease in graduate endowment loans, reflecting the graduate endowment fee abolition, and also shows a decrease in maintenance loans, which reflects our introduction of the part-time grants in the autumn.â€

Ms Hyslop said student support had been “inadequately funded by previous administrationsâ€.

“That’s why more than £84million has been set aside to address this, including £38million to introduce grants for part-time students, the £30million to improve student support as part of our consultation and £16.1million for discretionary funds this year,†she said.

In Scotland, the graduates get basically a free education....at least for a short while.

So what is the forums opinion here?

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Scotland has always had it easier.

As for increasing the interest rate on student loans, that's very worrying. They're supposed to rise in-line with inflation and nothing more.

They're already fiddling the interest as well. This year should have a negative interest rate applied, but it hasn't happened.

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Students saddled with rising debts

Ok, so England is going to lay the boots to all the unemployed graduates....meanwhile...

debt-ridden young Scots find slump good for bank balance /Students to save £80m as loan rate is cut to 0%

In Scotland, the graduates get basically a free education....at least for a short while.

So what is the forums opinion here?

off-topic

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It's not just Scotland. It's everyone with an SLC loan.

The real story here is why students aren't getting the benefit of negative RPI. The loans were sold as being directly linked to inflation - RPI. Students sure sucked it up when rates were 4.8%. Why not get a reprieve now they're actually negative. Breach of contract tbh, but hey the government sets the rules eh? I'd write to my MP if it was going to potentially save me more than a few quid...

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Scotland has always had it wiser

Corrected. You just don't want to kick young people in the head before they even begin to contribute to society !

Or do you ? :(

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