Graduates are getting a pay rise, while students continue to drown
Things might finally be looking up for students and their money: the government has stopped asking for more of it.
As of 6th April, graduates who started university in 2012 or later can now earn up to £25,000 before having to pay back their student loan. The announcement also means an immediate decrease in monthly contributions – 9% of anything earned above the new threshold, formerly £21,000 – meaning a slightly thicker pay cheque for graduates already in full-time work.
While the move will no doubt be welcomed by those who face an agonising trudge towards payday each month, it seems May has paraded an interest in students without focusing on where her support is needed most.
The financial situation for undergrads still teeters on the incredulous. Means-tested maintenance loans continue to wrongly assume all parents can (or will) pick up the deficit, maintenance grants have been scrapped altogether and interest rates on student loan repayments continue to rise. Supplementary part-time work is now as much a part of university life as any other module.
There is, of course, a great deal to be said for holding down a job throughout university; students stand to acquire invaluable work experience, economic independence and strong organisational skills, all of which can translate to improved prospects when combined with part-time study. Nonetheless, juggling hefty workloads with employment draws focus away from highly demanding courses, and has previously been linked to lower grades. Some universities are so aware of the potential impact they do not even permit their students to take on additional paid work. And so the undergrad conundrum continues.
Once upon a time the government’s inability to relieve such financial adversities would have been explained away with a tired ‘magic money tree’ rhetoric. Not this time. Given the substantial losses the government is willing to sacrifice for this new scheme – an additional estimated £2bn a year – there is clearly money to spare. Foliage may not be blooming ten pound notes, but it is being sprouted from somewhere. Why, then, are additional funds being swept past the sea of drowning students and deposited into the pockets of those already on a full-time wage?
Under the new system middle earning graduates will find themselves around £30 better off each month. A pleasant little sum, but one which, like income tax, national insurance, pension, and council tax, was always just another fistful of cash that slipped out before we even noticed it should be there. The student loan repayment simply formed another part of an inaccessible gross wage, and had the added psychological benefit of symbolising a modest attempt to repay what was owed. Yes, graduates will have a small amount of extra disposable income each month (though if they are earning enough to make repayments at all it will be a small amount compared to their salary), but the overall debt will now feel larger and more impossible to chip away at.
In comparison, undergraduates – who also grapple with the cost of accommodation, travel, textbooks, meals, phone bills and other living costs – have to get by with little to no external income at all. Both graduates and undergraduates are victims of a system that has not been kind to them. Both are deserving of economic help, but not, it could be argued, equally. When it comes to government funding, it is often a matter of degree. To support those who are stretched is to ignore those who are desperate. It is, somewhat crassly, the economic equivalent of saving a fishbowl from a flooded house.
None of this implies the move is any less of a win for students; indeed, many campaigned extensively for it after the government broke its promise to increase the repayments threshold with average earnings. And yet, the extra support seems rather misplaced. Instead of a much needed bump in bottom-tier maintenance loans or grants that bring higher education to the poor, all that has been secured is a slight pay rise for graduates.