Loans in everyone’s interest

August 14, 2014

The Association of Teachers and Lecturers has been warning the government for years that most teachers who don’t become senior leaders will have their student loans written off. Now it seems that close to 50 per cent of all loans will not be repaid. But the main problem is not the size of the loan. The killing factor is the annual interest. At up to retail price index plus 3 per cent, this is what will prevent teachers (and other graduates on medium salaries) from paying back their loans. It would seem far more equitable to make the loans interest-free.

Unlike reducing tuition fees to £6,000 a year (“The £2bn question: will Labour lower tuition fees to £6,000?”, News, 31 July), getting rid of interest rates will not entail a sharp drop in income for universities and will enable most reasonably paid graduates to pay back loans.

Political parties may baulk at further subsidies to students, and the idea may not grab as many headlines as cutting fees to £6,000, but interest-free loans would be quicker and cheaper to implement. The money the government does not receive in interest will be more than recouped by having fewer loans written off.

Of course, the ATL believes that this is just a short-term solution and there needs to be a fundamental reconsideration of tuition fees.

Martin Freedman
Director of economic strategy and negotiation
Association of Teachers and Lecturers

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