Student loans – we don’t need them and we can afford to educate

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Sometimes you need to take a deep breath and stand back from an issue to understand it.

Student loans are one such issue.

The reality of student loans is very simple: we don’t need them, they’re a purely political mechanism designed in no small part for the benefit of the financial services industry, and we can afford to educate all the young people who can benefit from going to university without having them.

That’s a big statement, I know, so let me justify it. I’ll start from the economic realities. These are:

a) We need to educate people if we are to be economically competitive;

b) All the evidence is we do not educate enough people to a high enough standard;

c) If we are to educate enough people then access to education has to be independent of means to pay;

d) As a mater of fact we have no alternative work for young people not in education to do — the young already have the highest unemployment rates and we are a very, very long way from full employment. There is no indication that will change.

e) We are, as  matter of fact, supporting our population of university teachers now from the resources within society. They, like most people, spend most of their income on consumption. In other words, in economic terms rather than  monetary terms the process of supporting them is a current decision that cannot be reversed once done, and no one is suggesting any change in their number or relative pay as a result of the decision to change student funding — they’re just suggesting a change in the way that this is paid for. I stress — ignore the finance: the reality is that the cost of these people doing their jobs is being borne out of current consumption now and will be in the future (just the same as will be true for students). That means no one is saying we can’t educate students. We can. All that is being argued about is how to finance it.

Never ignore the difference between economic substance and financial form is a regular mantra of mine. The economic substance is, as I note, that we can afford for students and their lecturers to be at university and this won’t change when the ConDems bring in their plans. So this is not about the economics of student finance — we are as a matter of fact able to afford that cost, and are going to continue to do so. This is about the form of the transaction.

That’s a really important understanding and I am both sure it is right and essential the well being of the UK.

In that case what are students loans about?

1) Trying to artificially cut the tax bill;

2) Trying to privatise education;

3) Ensuring students are so laden with debt they must become good, compliant employees — i.e. this is about suppressing the freedom to innovate, promote enterprise and to oppose by imposing oppressive burdens on those in work in the future;

4) Creating new securitisable income streams that can be traded;

5) Maintaining the position of an elite, traditionally afforded to them by access to education  and now to be afforded by their freedom from debt. After all, for those who pay £30,000 or year to send their children to private school sixth forms — and that’s what it costs — university education is a snip. Their kids can come out debt free — whilst others have to then bow and scrape to them when in their employment to ensure they can repay their debts.

Is this therefore a deliberate construct by an elite designed to oppress? I think so. I can’t see another explanation. And I think they believe it will work for them, very nicely. That’s why students are right to oppose this.

And yes — I do believe Clegg is from the group in society and holds the mind set that would promote student loans for this reason.

I know this is controversial — but if you can offer another explanation when — as I stress — as a matter of fact we can afford this education in economic terms — then tell me what it is.


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