Student Loans - Value For Money? 13/07/2007

Summer's arrived. University students have received their results, and are waiting to don their cap and gowns. Beyond graduation is their future, careers and their university debts. Research by the National Student's Union (NUS) has shown that most students (76% female and 68% male) believe university is value for money and is the natural progression from school but is this really the case:

1. Do students believe its value because they've enjoyed the experience and learnt life skills for careers?
2. Do they believe its value as they have not yet had to pay their debts off?

Figures from Unite's 2007 report have found that the estimated cost to attend university is £13,000 (for course costs and tuition alone!). This along with credit cards and other loans from lenders or family, may not be as easy for students to digest once University is over!
Before graduating, many students ignore bank statements as they have student loans. This loan does not have to be paid off until they are earning £15000+, which seems like a distant dream whilst partaking in drinking the bar dry.

Added to this are numerous debts such as: interest free overdraft's which can be dipped into for essentials (such as toga night with your flat mates). Not to mention, Loans and credit cards which, can be applied for in copious amounts on the Internet whilst studying in the library! Research from PFEG highlights how 90% of England's teenagers think of overdrafts and credit cards as ways to buy 'unaffordable' items. Budgeting is the last thing on 80% of students minds as they don't keep track of their finances.

Terms, conditions, and high APR'S on cards and loans are largely not thought about. Coinciding with credit cards popular demand is the domino effect of friends who have acquired one. Alternatively high Apr's are disguised with clever marketing perks like 3 months free interest, 1 year's free balance transfers, and if lucky a free student rail pass!

If a cards ineffective, it's easy to replace it with a different type. This only avoids debt! The NUS described the latest rise in student borrowing as 'dramatic'. This suggests the ease of acquiring credit is only adding to the problem. The student loans company released figures highlighting the total of British lending last year at £3.4 billion, a heavy increase from £2.9 billion the year before. Students are allowed to borrow up to £9000 from the state to cover increasing tuition fees. This, added to other forms of credit encourages students to build up more and more debt.

I'm not condemning students, not too long ago I was one! During University I worried about my finances, but I was emerged in the student lifestyle. After leaving the comfort of the family nest egg, I assumed that debt and finance were aspects of leaving home. Reality dawned after graduation!

Today the number of students in debt has increased to 75%. Does a degree represent value for money? or does the increasing and ongoing burden of debt far outweigh the benefits?