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Should Student Loans Be Written Off?
Junior Doctors' Pay Deal: đ | New Covid Variant (XEC): đŚ | Keir Starmer's Asylum Policy Interest: đ¤
The Debate Daily
September 17, 2024
Welcome to todayâs issue of The Debate Daily!
In todayâs email: We will investigate whether the government should write off student loans. In the UK, student loans are written off 30 years after graduation. Some argue it benefits the economy by increasing disposable income, increasing capital flow and decreasing anxiety about debt in old age. However, others argue that it may encourage ârip-offâ degrees and potentially harm taxpayers.
By Gabby Miller
The Headlines
Junior Doctors' Pay Deal: Junior doctors in England have accepted the governmentâs offer of a 22% pay rise over two years. Members of the British Medical Association backed the deal with 66% voting in favour. Nearly 46,000 took part in the online ballot in total.
New Covid Variant (XEC): Identified in Germany, in June, cases of the XEC variant have since emerged in the UK, US, Denmark and several other countries, according to scientists. Though experts say vaccines remain effective at preventing severe cases, new mutations create the possibility of a dominant strain this autumn.
Keir Starmer's Asylum Policy Interest: Keir Starmer met his Italian counterpart, Giorgia Meloni in Rome yesterday for talks on how Britain could emulate Italyâs crackdown on illegal immigration. He has suggested he will study Italy's asylum processing deal with Albania as part of a "pragmatic" approach to tackling migrant boats crossing the English Channel.
Debate #010
Should Student Loans Be Written Off?
Some argue that there are good reasons to write off student loans, such as the benefit to the UKâs economy and improved quality of life that graduates feel. On a long-term scale, not writing off debts can further be seen as a burden on the government, which has to deal with pensioners' debt.
Economic stimulation - writing off loans allows graduates to put the money directly back into the broader economy through wealth-creating opportunities/consumerism such as home ownership or encouraging entrepreneurship, all from more disposable incomes, which encouraged a greater circulation of capital in the broader economy.
Improved quality of life - Writing off debt decreases stress over extended payments, along with taxes and general spending. By forgiving student debt, graduates can be free from loan repayment anxieties and live an improved quality of life.
By forgiving student debt, graduates can be free from loan repayment anxieties and live an improved quality of life.
Potential reduction of governmental burden - Some peopleâs student debt may extend past 30 years. Forgiving the remaining debt can reduce long-term governmental liabilities on problems of âuncollectible debtâ given only 20% of graduates manage to repay their student debt.
HoweverâŚ
Others argue that forgiving student debt is unnecessary because it burdens the taxpayer horizontally. Furthermore, it may also lead students to take this policy for granted, pursue the so-called ârip-offâ degrees, and even drop out of university.
Burden on the taxpayer - A student-debt write-off will cost ÂŁ4 billion annually. This increases the burden on the taxpayer regardless university attendance. Hence, it could be argued that it is not fair to increase the tax burden on a horizontal basis.
Encouraging ârip-offâ degrees and dropouts - As far as narrowly looking at the employment and income value of degrees, debt forgiveness can encourage students to pursue ârip-offâ degrees that have little impact on their job prospects or even increase dropouts, which leads to potentially taking debt forgiveness for granted. Student loans incentivise hard work so students can land a good-paying job due to a valuable degree that will benefit themselves and society.
A student-debt write-off will cost ÂŁ4 billion annually. This increases the burden on the taxpayer regardless university attendance.
Lack of a large impact - Forgiving student loans will not drastically change how loan repayments work because it would not reduce their monthly payments anyway. The proportional system allegedly means that student debt collection should not necessarily be harmful. Since graduates earn more than those who do not attend university, student debt should not be a huge problem.
Summary
The question of student loans, debt and fees has recently re-surfaced within the last few months, especially in the context of the British general election. Due to the cost-of-living crisis, many have viewed student debt as a significant burden. Hence, there have been calls to ease this pressure on graduates, where having a more comfortable quality of life is a priority over paying off student loans. However, the other side argues that this will make the government spend money it does not have and will, in turn, punish the taxpayers, including graduates. Although the 30-year write-off is still in place, within the context of particular financial restraint of the Labour government, the question of student loans may be particularly volatile.
What do you think?
Should higher education be free?
In the current context of the cost-of-living crisis, should paying back student loans be more exponential?
Is the current system of student loans fair still?
This newsletter was brought to you by writers: Gabby Miller
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