How I was fooled by Student Loans

I must admit, the government had me completely fooled over student loans.

Yes, I was annoyed that my children are still going to be saddled with massive debts, despite my wife and I saving up for them to go to college since they were born.

Yes, I was annoyed that people who had enjoyed free education voted to make their children pay for the same privilege just so they could pay a little less tax. (To be fair, some people did vote Liberal in the mistaken belief that they were opposing loans)

And yes, It didn’t surprise me in the slightest that terms and conditions have been  changed so that the interest rate charged is now higher than the rate for regular loans

No, I was sufficiently cynical to have foreseen all this.

What astonishes me was how gullible I was in swallowing the government’s reason for imposing the loans.  I really thought it was because more people were going to college.  I seem to remember that was the line trotted out by Brown, Osborne, Clegg et al.    

How stupid can you be.  No, it was another accounting dodge.  Of course it was.  You can read it about in this article on the BBC News Website.

The full article is well worth a read, but the following quotation sums it up

Under the current arrangements, money lent to students for tuition fees and living costs does not show up as a negative in the public finances.

Ah! And now it all makes sense.

I’m pleased to see that I wasn’t the only one fooled.  Committee chairman and former Conservative minister Lord Forsyth was also shocked.

“I had not understood that by moving to a system of funding through loans, because of the accounting methods of the Treasury, it was possible for George Osborne [then chancellor] to appear to increase funding for higher education by £3bn but at the same time cut his deficit by £3.8bn.”

And that’s not the worst part:

Outstanding student loan debts are £118bn and rising – but when it comes to the public finances and the deficit, the cost of student loans is invisible.

In terms of the government’s reporting of its finances, the cost is kicked down the road and won’t appear until debts begin to be written off after 30 years.

So not only are we sending our young people into debt – my children among them – but just about the time they’ve finished paying it off  they get saddled with this cost as well?

I  tell you what, someone in government really hates kids.

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