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Well Fair State

The other morning I received a postal statement from the Student Loans Company (SLC) informing me how much I presently owe them, and details of all payments made in the tax year 2004/05. Everything appeared to be in order until I noticed the interest charges applied to the account over that period, which effectively cancel out any contributions I have made. The result of this is that I haven't actually paid anything off the loan; I have merely given the government (fat controller of the SLC) a golden handshake for lending me the money in the first place.

Now I readily admit that Higher Education should not be free, and I accepted the fact that I would need to borrow money to fund my student years long before I even applied to University. It is fair to say that very few parents can (or indeed would choose to) pay for their offspring's University education in it's entirety, especially considering the obligatory binge drinking which takes place on a daily basis, and nor should they be expected to. Student Loans are the only viable option for most young people thinking of University, and so each year thousands of students take them out in good faith, not realising they are being ripped off by a Government that is not only happy to saddle them with an immense debt, but plans to make money out of them from day one.

Having done some research into the SLC, I am quite alarmed at the workings of their operation. The interest rate applied to loans as of 1st September 2005 will be 3.2%, up from 1.3% only 2 years ago. Interest on the loan is charged on a daily basis and it compounds monthly, meaning that students pay interest on their interest after only the second month at University. There is a common myth that student loans are interest free (I was under this impression when I took mine out) however the truth is that each student will be paying interest for three years on a loan, which he/she cannot possibly hope to begin to pay back while still studying.

Repayments for all graduates are set at 9% of annual income above the £15,000 minimum threshold, meaning that anyone who earns around this figure is unlikely to meet the interest charges each year. A typical graduate on an £18,000 salary would pay back £270 per year, and if we estimate his/her student debt at £11,000, this would result in an annual interest charge of £352. It doesn't take Nick Leeson to tell you those figures don't add up.

It is not possible to challenge the system, as a Student Loan is classified as low cost and as such is not covered by the Consumer Credit Act. This means no formal credit agreement has to be signed, which allows the SLC to change the rules of interest and repayment as and when they like. In another interesting twist, the SLC does not receive any money from the Inland Revenue (who collect the payments at source) until the end of the tax year, thus meaning that any loan payments made in May are kept to one side for 11 months while graduates are still paying interest on the loan balance.

It seems to me that the Government of this country suffers from a warped Robin Hood complex - namely that they take from those who work hard and prosper, and give it to those who wouldn't know a days work if it slapped them across the face with an ASBO. The welfare state of this country has an awful lot to answer for; a system that was originally designed to help honest people with the cost of healthcare and old age is now the primary source of income for people who have no intention of working, and who spend their lives watching simplified current affairs programs while guzzling fish fingers.

Walk through any town centre on a weekday and witness what I have christened the Pram Prix - namely the endless parade of single mothers who didn't fancy a life of work, and instead decided to have a child with the first idiot who bought them an alcopop. These women are provided with their own flat, free public transport and money each week to live off. As a result they spend each and every day idly pushing little baby Chastity around the local town centre, browsing the shops for bargains and squandering the tax payers' money without a care in the world.

Contrast this system with the way the Government is ripping off people who choose to stay in education, and penalising those who work for a living, and it becomes difficult to see the justice. Of course it makes economic sense, as the majority of benefit money is pumped straight back into the economy, but I believe it is morally wrong. My advice to anyone starting University in the future is this: don't bother with a student loan, just sell your body to the highest bidder, and continue to do so until you have enough money to pay for your degree. It may be painful at times, and doubtless rather unpleasant, but it sure beats taking it in the ass from the Government.

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