Are you studying at a British university right now? Paying £9,000 a year? Guess what – it's all been for nothing. Congrats!
In 2010, the government announced its plan to lift the cap on university fees, sparking a unprecedented wave of student unrest. The Coalition tripled tuition fees anyway. Today, it transpires that the government may actually lose more money than it would have saved if it kept the old £3,000 fee system.
In no uncertain terms, the Guardian explains that the Treasury will soon derive "zero financial reward" from hiking tuition fees. This is because the number of graduates failing to repay their loans is increasing so quickly that any savings made as a result of the higher fees will soon be rendered null and void.
Official forecasts predict that 45% of the student loans given out each year (all £10 billion of it) won't be paid back. By current estimates, about £90 billion of the overall £200 billion in student loans will remain unpaid by 2042. It gets worse: according to research group London Economics, all the data suggests that the "economic cost of the 2012-13 higher education reforms will exceed the 2010-11 system that it replaced".
Basically, that means that the government will have tripled tuition fees for nothing. In fact, it'll actually have cost them more to charge three times as much for university. Yes, that's right – if you're at university right now, you may as well have been charged £3,000 for all the good it's doing for the public purse.
Why aren't graduates coughing up the money? Just ask any twenty-something entering the job market. The starting salary for young adults has plummeted, competition between degree holders is skyrocketing and the economy is getting worse for young graduates, not better.
In 2013, nearly half of recent graduates are in non-graduate roles such as sales assistant or receptionist. Almost a tenth remain unemployed, and a third are working in a low-skilled job. Under the current system, graduates only need to repay their loans when they earn over £21,000. You could be the world's best sales assistant and you still wouldn't get that kind of salary. Who cares about repaying your student loan when you can't even afford the rent?
Plus, it's worth nothing that the situation could be even worse than thought. As a recent Select Committee report notes, "the value of student loans never to be repaid could be even higher – because the Government consistently overestimates what’s due to be repaid by some 8%".
If Twitter is anything to go by, basically everybody predicted this would happen anyway. So well done on the government for surprising exactly nobody.
Follow Zing Tsjeng on Twitter here @misszing
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