United Kingdom has highlighted student debt as one of the biggest financial crisis in the economy. It is among the top list of issues hindering the productivity of markets. By the statistics of Student Loans Company (SLC) 2016, £ 0.8 trillion is stuck as loan debt from reserves of UK government which could have been invested in other big purchases for development of the economy. Student debt is considered as even a worse problem than the mortgage debt in the economy. Mortgage debt issues have been resolved. However, student debt still has to be taken into account in order to deal with financial crisis.
In contemporary market structure, it is a basic requirement for a student to obtain a degree for a reasonable job. Due to wide competition and shortage of good jobs. More than 40 million are indebted with student loan which is paid from government reserves. On average each student owes £18,431 when he gets his/her graduation degree whereas 70% of graduating students are indebted with student loan. According to the statistics, one out of every four students default and do not repay loans. Student loans also don’t cover complete fee charges of colleges of students. In the past, students could pay more than half of their study charges with the help of student loans, whereas it only covers one third of total fees.
Despite huge efforts made by UK government, student debts have seized the economy due to spending of colleges more on nonacademic staff and extracurricular activities. Student loan is impacting the economy both ways, on one side it has bound reserves of finances whereas in 2013 36,000 lost their social security check due to the reason that they were unable to pay their student loans. Secondly, student loans are harming the economy as a double edge sword. Many finance experts and analysts consider student debts as a support for students towards a bright and successful career which has promoted the culture of student loans. But facts and figures tell the other way. Government could not keep pace with increasing tuition fees and college dues which has led to a dramatic increase in student loan.
Recession and lack of jobs is one of the main reason which has encouraged borrowing among students. Income rate is almost flat since 2000 due to recession in the market which has left no option for students but to borrow money for their studies. An average student pays off the loan by 10 years after graduating which depreciate the value of money lent to student. According to many surveys and researches the students who took loans for their studies faced constant delays in major events of their life. Students indebted with loan were likely to mention that they faced delay in buying personal car, home or getting married. Due to multiple adverse impact of student loans, it is considered as the most influential financial crisis in UK’s economy.
Greenaway, David, and Michelle Haynes. “Funding higher education in the UK: The role of fees and loans.” The Economic Journal 113.485 (2003): F150-F166.
Callender, C., & Jackson, J. (2005). Does the fear of debt deter students from higher education?. Journal of social policy, 34(04), 509-540.
Bachelor’s degree in liberal arts English
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