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This Is Why Comparing Student Loan Repayments to Buying 'Posh Coffee' Is a Load of Bullshit

Student loans are an education mortgage on a negative equity house (the job market is fucked and graduates are fucked).

by Joel Golby
04 February 2015, 3:17pm

A posh coffee, such as the sort that might cost around £2.22 to buy (Photo via Alpha)

Greg Clark, Tory MP and Minister for Universities, has reportedly said that students shouldn't be bothered about their profoundly large loan repayments. Why? Because if you work out how much it actually costs to repay this debt per day, it's the same as one "posh coffee", he says: about £2.22.

Presumably Clark chose his metaphor because young people are absolutely nuts about posh coffee. You know: lattes and that. Frothed-up milk. A frappuccino the size of a bucket to help wash away the feeling of gnawing dread that comes with 30-year debt.

Clark made the comments at a Royal Society science and engineering debate last month, but they were only reported by the Times today: "What that means is if you earn £30,000 as a graduate, you pay back £2.22 a day," he's reported to have said. "Now, there are people who buy cups of posh coffee for less than that, and I think people recognise that that is a phenomenal investment."

You know, those £30,000-a-year graduate jobs everyone has. Just lying around like litter on the streets, £30,000-a-year graduate jobs are. That's one thing you always hear recent graduates say: "I just wish people would stop offering me £30,000-a-year jobs! I'm already in one! They are that plentiful and easy to get!"

In reality, though, the average graduate salary falls between £18,000 and £24,000, and 47 percent of those are non-graduate jobs (boring filing; working in the kind of place that makes you clock in and out for piss breaks; making posh coffees for people who are still students). Student loan repayments kick in at 9 percent marginal rate when graduates' salaries reach £21,000, so those on the upper end of that spectrum are paying back about 60p a day. Score one of those unicorn-rare £30,000 starting graduate jobs and your monthly repayments will start at £68, every month, until 2045.

It's manageable debt, but it's a lot to pay for a few photos of you looking like a dick in a mortarboard, before having to sit in front of a shiny-suited recruitment agent who doesn't understand what sociology is, begging for work. With the average student debt now standing at £43,500, current Student Loans Company projections suggest most graduates won't pay off that debt until they are in their fifties. And that's if they even start: the debt is written off after 30 years, meaning many don't pay their loan back in full. In July, a group of MPs warned that the student loans system is nearing being financially unworkable – it's estimated the government loses 45p on every £1 it loans out through the system, and tripling fees back in 2011 hasn't done much to help. Come on, guys – think about it from the government's point of view. Get a £30,000-a-year graduate job and start paying your loans back!

Shadow Business Secretary Chuka Umunna was first to go in with his studs up on Clark's comments. "These bizarre remarks from universities minister Greg Clark show just how out of touch Tory ministers are on the huge costs and debts now facing students," he said. "They demonstrate a deeply dismissive attitude towards the real concerns which students and parents have on the cost of a degree."

Because – and this can be proven by anyone who's ever bumped into a lad from school who sacked university off to train as an electrician and who says things like, "I finish work at 1PM, chap! I'm on £45,000 a year! Just bought a fucking house! How's that writing thing working out for you?" – the current state of the loans system is making a lot of people deliberate whether or not university is for them. And whatever your take on the value of spending three or more years reading philosophy and complementing romantic conquests on their taste in Bob Marley posters, it's bad that a massive financial goof and a hamstrung system might lead to fewer smart people walking about. Those who do graduate end up paying a mortgage on their education, and – to stretch the house-buying analogy to breaking point – often end up with negative equity, unleashed as they are into a heavy sigh of a job market.

As a result, student loans are poised to be a major talking point at this year's little-publicised general election. Universities UK, a group of university vice-chancellors from across the country, started the debate over the weekend, sending a letter to the Times warning that Labour's mooted £3,000-a-year fee decrease would leave a £10 billion hole in the education economy. While Labour figure out their tuition fee policy in the wake of a strongly-worded letter, the Conservatives are likely to stick to their £9,000-a-year plan; the Liberal Democrats are probably just going to hold off on making any big promises after last time; and the Greens are planning to abolish tuition fees altogether and pump state research funding into institutions. (UKIP, meanwhile, plan to abolish tuition fees just for good, honest, old-fashioned subjects like science and maths, so all you wishy-washy, loony-left humanities students can pay for your own bloody bongos and berets. The most slipper-wearing-dad tuition fee policy of all.)

But a lot of this is thinking of the student loans as some sort of big, unworkable, many-armed monster, a government concern and not a human one. It's not. For most people (read: me), a student loan is sort of a conceptual, gloomy cloud – I know it's there, and I know it's going to rain on me eventually, but for now I'm just going to drink my fancy coffee and pretend it's not there. A recent study found that there is legitimate stress in carrying around a student debt – a large-scale study of more than 4,000 people found that those who had taken out education loans displayed signs of poorer mental health on a standardised MH questionnaire. And the £21,000 benchmark sort of acts as a weird marker of success for those operating below the line: they're not even climbing the debt mountain, they're just idling in the car park desperately putting their boots on.

THE_STATE_OF_THINGS_2015.jpeg (Photo via John Reiser)

It's not fun to spend three years trying to better yourself and prime yourself for a job in the real world, only to be told "you should have learned a trade"; to struggle for work after exhaustive graduate scheme interviews fall away to nothing; to watch your emails go unanswered and graduates your own age make placards of their own CVs in a desperate bid for work; to claim JSA while benefits officers ask, "Have you considered shop work?", as though they think it is beneath you, as if working is beneath you.

In 2015, more and more people are giving up on their job hopes – because the jobs aren't there, because they can't afford to commute to do work experience, because the clunk of dread that comes with a new batch of graduates makes them think their time is done – and one way or another, that's bad for the country as a whole. Would-be vets working in petrol stations; biologists handing out leaflets; aspiring teachers printing out their CVs and enquiring at their nearest sandwich shop. Now is not a good time to be a graduate, and frothy comments about posh coffee and lucrative starting salaries don't really help.

@joelgolby

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