Student Debt Matters

Why is student Debt a problem?

For those in the UK: did you know that, in the US, student debt is not dischargeable in bankruptcy? Did you know that it is not dischargeable in divorce. If your ex-defaults, you may be liable.

In the UK, until recently fees have been manageable but some of my students will still finish degrees under the old system and leave the University £30,000 in debt.

For reasons not of their making, one of my students will need to repeat a year on a new programme. This will result in perhaps £60,000 in debt when leaving University. This student is under the new fee regime.

What does this amount of debt (£30,000 to £60,000) mean?

In my neighbourhood, you can buy a semi-detached house for £65,000 and houses have sold as low as £52,000 since January of this year (2014). 

The Student finance website of the UK government has a calculator (here) that puts things in perspective. They give an example of taking 29 years 8 months to pay back a loan of £50,025. This will require £161,007!

Although somewhat dated (2007), this article (here) suggests a university graduate makes on average £160,000 more than someone without a degree over their working life. This is average, not the median.

What not to listen to?

... that you don’t have to repay until you are making over £21,000. You accrue interest during this period and, in honesty, many entry level graduate jobs do not pay this much. 

... that any unpaid amounts will be forgiven after many years. The interest rate is listed as the rate of inflation as given by the retail price index plus 3%. Just because the debt is written off after a period of time this does not mean you will not be subject to a debt burden for a long period of time. 

What to do?

Get into as little debt as you possibly can while undertaking your studies. If you can live at home, do so. Consider studying in other countries. Look into studying in Germany. If you are a very good student consider the US private universities. If you have genuine need for financial assistance, there are very good programmes to assist.

If you can skip a masters and go directly into a PhD do so. Never pay for a PhD. If you can not compete for a fully funded PhD, consider doing something else.

Finally, my students bravely charge into education because they want to learn and because they believe in the benefits of education. If you really love your subject and learning, be careful. If you are doing it for the economic benefits, be careful. On the face of it, it is a marginal investment. I never thought I would ever find myself saying that. Minimize the amount you borrow to improve the value of the investment. 

Please read this article (here): It inspired me to write this. Although it is from a US perspective, it points out some pitfalls of student debt.

In Praise of Unions - They Can Win

If there was ever proof that disciplined and strategically rational Union action can and will win, look no further than the Universities Union. They achieved their objectives, they let the opposition tie itself in knots, and ended up with exactly what they had planned all along. 

It was a costly battle for the other side. It was a win-win for the union. They ended up richer than they were before due to the strategic incompetence of the other side. Union Organisers of yesteryear would be proud...

... or not. 

The Union I am referring to is UCEA (not UCU). UCEA is the Universities and Colleges Employers Association. Call it what it is – a Union and a very successful one at the moment. If it is not a Union, then perhaps it could be called a price fixing organisation. Union fits better and as a group, they fought UCU to a standstill. To my view, they gave only what they intended and nothing more. Actually, they did not even fight. They just waited while the other side self-destructed.

A rough synopsis is that the employers offered a 1% pay raise for the year. This is below current inflation, follows many years of below inflation pay raises and is well below the average rise in pay of Vice Chancellors (VCs). How could this be defended in the face of rising University incomes and surpluses? 

The Union considered this, balloted its membership on strike action and action short of a strike. Both were given a go-ahead. A work to contract was declared, a series of strike days followed together with a set of 2 hour strikes. The employers did not budge as far as I could tell and a subset of Universities took a hard line that deducted a whole days pay for a 2 hour strike, including hours worked before the strike commenced. In my opinion the latter is clear wage theft. There was a profound lack of any serious help from UCU on what should be done to recover this.

Academics have noticed that employers do not worry too much about strike days. The reason is the Academic mentality: we always do the work somehow. Students don’t leave the year missing, for example, the concept of x-rays because of a strike day. We always mark everything in the end and we try to help our students. Most of us chose to be academics because we love knowledge and learning and teaching and finding out new things.  We still do these things while out on the picket lines, taking a shower in the morning, or walking the dog.  Academics have also noticed that against this backdrop, strikes only enrich employers. Because of this, strike discipline was pretty appalling and got worse.

So the Union put its last option on the table, a marking boycott was to begin on a particular date in late April which would continue until, well whenever, ...  for us it would have been at least until mid-June. The employers (at least mine) made clear that refusing to mark would be a breach of contract and pay would be deducted from the time the boycott started. As disgusting as the deduction of pay from before a strike began by the UCEA militants, on the point relating to a marking boycott, I agree with the Universities on their position. If I decided to boycott lecturing or supervising labs, it would be perfectly within my Employer’s rights to decide I was not fulfilling my contract from the time I started the boycott to the time I stopped. 

Even the most militant Union members realised a marking boycott was a very costly proposition and if followed to the letter would result in loss of a month or more in pay. It was unlikely to happen in a disciplined manner and staff on tight budgets would not be able to afford it. That is pretty much where the fight ended.

Despite this, I think the Employers were a little nervous about the marking boycott. Negotiations took place close to the date the boycott was supposed to begin and UCEA came back with a masterful last minute gambit: they offered a 1% pay raise for this year (no change in offer) AND "sweetened" it with a 2% raise (probably what they would have offered anyway) for next year. This was sufficient to result in a ballot of UCU members, which voted overwhelmingly to call off the marking boycott. Game over.

So that is how you snatch defeat from the jaws of victory. A very just campaign to improve pay in the face of long term loss of real wages to inflation against the backdrop of large real average pay increases awarded to VCs was lost through tactical incompetence. It also puts the lid on any pay increases for probably another two years.

I am sure UCU will try to put the best face on this, but they were outgunned by a more disciplined and strategically competent Union. Simple as that.