Student Loans Weblog

In the UK a large percent of the population have not paid back their college loans. The government wants to ensure that they get their money back or the graduates who did not pay back will go on a list of blackballed names which means they will fail to get personal loans, mortgages, or even credit cards. The Times Online reports:

The Student Loans Company (SLC), which has been lending to students for 15 years, is not allowed to identify graduates to banks and other financial lenders if they default on their loans.

But Ralph Seymour-Jackson, the chief executive, told The Times that he had asked the Department for Education and Skills (DfES) to change the rules so that the SLC can pass on details of bad debtors to credit reference agencies.

He said: “First, this is a debt to the taxpayer and needs to be collected. There is also the issue of responsible lending where banks need to have a full picture of the debts a borrower has in order to make the right lending decisions. We should play our part in this.”

Defense spending is expected to increase over 20 billion dollars again next year. To help pay for the annual 5 - 10% increase in military spend the Republican led congress decided it would be appropriate to cut social programs, including student loans. On average students currently borrow $17,500 for college. The new program will require the average student to take on an additional $5,800 in debt. That will likely put education out of reach for many. The Columbia Spectator reports:

The House deficit reduction bill, which passed by a close vote of 217—215, reduces spending on federal student loan programs by $14.3 billion over the next five years. The Senate bill, which passed by a vote of 52-47, reduces student loan spending by $9.7 billion over the same period. The bills lower subsidies to private lenders that provide student loans and increase borrowing costs for students.

Some are questioning the ethics of the new bill, which allegedly uses income from student loans to pay off war related national debt:

“What is most concerning is that Representatives are willing to use the income generated from student aid to pay the government’s debt,” Nate Walker, executive director of the National Tuition Endowment and TC ’05, said in an e-mail. “Specific to New York, it’s upsetting to think that two of New York’s Representatives—Kuhl and Walsh—are willing to use students’ debt to pay for the government’s deficit. This is unethical.”