3.2bn pounds of student debt – the next mis-selling scandal?
This autumn, half a million school leavers will make one of the biggest financial commitments of their lives by going to university.
This autumn, half a million school leavers will make one of the biggest financial commitments of their lives by going to university. However, despite living in an age where they can instantly check their bank balance and mobile phone credit, many will struggle to view their indebtedness.
Last week, pupils across the country received their A Level results, earning a place at one of more than a record 500,000 university places. University marks a major milestone for most people, as it’s the first time they have independent control of their finances. It is now also one of the largest financial decisions, after buying a house, they will ever make. For example, recent research by the Institute for Fiscal Studies revealed an average student leaves university with a debt of £44,000. This is almost double those of people who graduated before the new £9,000-a-year fees came into effect.
Despite this enormous financial burden, students only receive annual updates of their balance from the Student Loans Company (SLC). To help them better manage this debt, SLC should provide better visibility of loan repayment using digital tools. At a minimum, students should be able to view live balances, have flexibility with the amounts paid and be able to choose when to control the debt and pay it off sooner.
Graduates and new students need simplicity, oversight and control over their debt, which can all be provided with more up-to-date technology. By improving awareness and tools now, the government will prevent a substantial element of the £3.2bn debt burden being written off at the taxpayer’s expense at a later date. Without providing students with options for managing and paying off their loans, how can we expect them to take responsibility for paying back the money they owe?