As I've followed the tectonic shifts throughout the British education system over the past year I've become increasingly concerned about the issue of debt. In particular I wonder if we are preparing all young people to deal with it appropriately in the future, especially those that already face other disadvantages. My fears about debt mainly arise from these three developments.
Firstly I believe that our economy, like most across the developed world, is still struggling to recover from a huge global recession that was caused, in part, by poor decisions about debt. Although the causes are complex and contested, most would agree that this has been a common contributing factor at all levels of the economy. For example this has allowed for widespread mis-selling of complex financial products, from credit default swaps to the subprime mortgages they were often based on. Another outcome is that personal levels of debt are on the rise, often based on poor financial decisions, like that nicely illustrated here.
My second area of concern relates to the proposed changes to the school system and the National Curriculum, that will result in financial education risks being squeezed out of school timetables to allow for a greater focus on traditional subjects and knowledge. An issue now being taken up by consumer über-champion Martin Lewis, see his petition on this issue here.
The third and final issue is that the new English higher education funding system is more complex and will lead to bigger debts for many students. Without arguing over the details it is clear that tuition fees will rise significantly and the system of loans, fees, bursaries and scholarships will become even more difficult to navigate. The government's Your Future website about the new funding system emphasises that tuition fees are not paid up-front, re-payment only starts when earning above £21k p.a. and some won't have to repay in full or even at all. However I worry that this nuanced message is being lost in the current media storm and that those who are already least able to make sense of such information are being further disadvantaged.
This point is nicely illustrated by some recent YouGov research with parents, showing that a third of parents with children aged 13-21 say they have little or no understanding of the new university tuition fees system in England and Wales, and over half say they have not received enough information on university funding. Parents from lower socio-economic groups understood even less about the new fees than their more advantaged peers, with only 51% claiming 'moderate' or 'full' understanding compared to 66% respectively.
So hopefully that summarises why I'm so concerned about debt and the fate of future generations, but what do you think? Am I right to be worried? Please comment or get in touch with your views about this important topic, though please don't just tell me to calm down Dear...