Student debt is the new subprime. It’s a new bubble being created to feed a financial sector that produces nothing, but needs endless amounts of public money to speculate with. Student debt will be packaged up and sold off, and sliced and diced and modified by arcane financial instruments.
Are you a student? I don’t want to alarm you, but you have a lot of challenges ahead of you.
Firstly, let’s look at education: it’s probably costing you a fortune.
This article will use examples from England, but education is being privatised across the world, and the policies are being enacted everywhere.
When the Coalition government came to power in the UK in 2010, they raised the cost of education by tripling tuition fees. This is despite the pledge by one of the Coalition partners, the Liberal Democrats, to vote against any fees increase.
There were massive protests by students, but the rise in fees went ahead.
Tuition fees now typically cost students £9,000 per year in England. On top of this is living expenses, meaning it is now typical for a student to leave university with a first degree and about £60,000 in debt.
In Scotland, which is part of the UK but has its own devolved education system, tuition is free for undergraduates – though students still need to cover living expenses. The Scottish Government is able to do this under existing funding arrangements, which proves that there is no financial justification for the English model of burdening students with debt. The Scottish model of directly funding tuition is a far better one, because it cuts out all the middle men.
What really is shocking is that tripling fees for students hasn’t saved taxpayers a penny – in fact it’s likely to cost them more, as this Guardian article exposes. This is because of high levels of graduate unemployment – many graduates will never earn enough to pay back their loans. Also, the loans are likely to be sold off to private companies at significantly less than their full value, leading to another taxpayer subsidy for a private sector cracking down on indebted students.
So taxpayers will continue to subsidise education, except students will no longer benefit – it will be the universities, landlords and the people who buy up the loans when they are privatised.
This isn’t unique to the UK – attempts to turn universities into markets are happening everywhere.
The idea, promoted by market fundamentalists, is to turn students into customers, entrepreneurs prepared to speculate on their future. You should rationally choose a course at an institution that will guarantee you a return on your investment – so if you borrow £60K for your degree, the “graduate premium” you get as a result should be worth more than that. You’re supposed to see your education as an investment in your future enhanced salary.
Apart from the fact that it is both inappropriate and just about impossible to project a financial value onto most degrees, what’s really behind this is an attempt to create two things: new market in education, and a new bubble in student debt.
Writing about the privatisation of Higher Education in the London Review of Books, Stefan Collini describes in detail how this system works: Sold Out is a long article, but worth reading in full, because it exposes just how disastrous free market education policy is.
And having achieved an expensive degree and a massive debt, what do you do? The world of work is hardly inspiring, with youth unemployment at record levels. How long will you need to wait before you get a job in the field you trained for?
Most young people join the ranks of the precariat – the unemployed or under-employed graduates, the unpaid interns, the 1.4 millions workers on zero hours contracts, the young academics on a temporary contracts, under continuous pressure to publish.
Journalist Paul Mason talks of the graduate without a future as being an important social force. Highly educated people without a vested interest in the system, and with nothing to lose, are likely to be leading the clamour for a great rebalancing of wealth and power.
We wish you the best of luck.
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