¶ … U.K university students who are debt ridden. Survey on Student Debts

University students today are facing increasingly high levels of debt because of the credit card and the various student loan institutions available to them. This leads to them suffering from anxiety and depression when they are unable to pay it off.

A national survey that was conducted by the academics at various universities in the U.K came up to the conclusion that students have no trust in banks and other loaning institutions, meanwhile nearly two thirds of parents of university students are opposed to the government's current student support system called top fee. The survey also concluded that the current fees and loans system is detested among the student body as well.

Margaret Hodge also accepted that system of loan schemes would pose to be a nightmare for the students in the future.

The students want the prime minister to rethink on university tuition fees. Somehow even for the government this is not a feasible task since the cost of tuition fees and cost-of-living loans will be £600m a year.

The fact is that less than half the public is for the present system, this adds to the mounting pressure on the government to rethink over it since it cuts off the chances of the highly intelligent students coming from lower income bracket to go to university. Many opine that the government is promoting the student loan scheme leading to the development of a debt culture.

There are several surveys that suggest that nearly three quarters of the students who graduate with excessive debts tend to suffer from high anxiety, and severe depression.

The government may think that borrowing money from the student loan schemes will lessen student debts but in reality they only generate a distrust of financial institutions.

A national survey revealed that the view towards undergraduate debts discovered that two thirds of parents with children in universities were opposed to the current government loan scheme for students proposed by the government.

Parents don't really believe that students will learn about real life from borrowing money during university but they think that borrowing will simply cause students to become comfortable with debt as part of life. Statistics reveal that 85% of the students are accustomed to borrowing while at university.

It is funny how the statistics reveal different results fro males and females. It is noted that less women acquire debt, and even those who are in a debt in normally restricted to lower level of debt and in comparison to males they are ironically more worried about their debts too.

Women are more likely to pay a bill with their last £10, while men are more likely to spend it on alcohol and other social activities. Men are in more debts because they normally have a 'devil may care' attitude. They also spend senselessly on their social activities even though they know their debt is rising.

One of the mistakes incurred by the current students is their belief in the fact that they will be able to relieve themselves of the huge debts by their unrealistic optimism about their future income.

The academics are of the view that the student loans system should not be thought of as a replacement of the grants system. With the present funding system the academics feel the necessity of programs that inculcate the students with the education in money management

Here is a good example of an American university student named Eddie Fishel who chooses to use his credit cards to buy everything he needs. When his TV was out of order he chose to use his credit card to buy a new one.

Even when he needs groceries or other necessities, he uses his credit card for purchase that could have been done with cash. Like most other people his age, he is well aware of the fact that heavy use of the credit leads to serious debt, Fishel, a Kansas State senior in mechanical engineering, seems to be the least bit worried about the way he uses his cards.

He also suffers from the notion that he will be able to pay off his debts when he starts working and earning a good income. He adds to the 83% of the undergraduates who have at least one credit card.

According to a study, there is an increase in the number of undergraduate college students carrying credit cards and having huge debts than ever before. There is also a marked percentage increase in the number of students having at least one card. This has risen by 24% since 1998.

Money is the most important factor in university education. Students feel that universities are more like a business than educational institutions.
In a survey conducted at the Queen Mary University it was found the 64% of the students are in a debt. This percentage comprises of over half of the student body at this university. This university has a diversification of classes the students hail from. The following table illustrates the frequency of those students who are currently in debt ranging from 1000 to 4000 Sterling Pounds or out of it.

The five students who were interviewed live in different accommodations and out of the five there are two who are in a huge debt and worry about how they will pay it off. The reasons for why they are in a debt vary from one to one but two seem to be in it by thousands of pounds. They intend to use the following strategies to pay off their loans:

Work

Parents/family/

Hardship funds

The findings of the interview revealed that 68% of the students work part-time either on the weekends or for 20 hours during weekdays throughout their academic year. They choose to work either part-time or for a restricted number of hours so that their studies are not affected by work timings. They also feel that by working part-time they will be able to stay out of debts and seek fewer loans to get through university education.

The results from the interview also revealed that 77% of the students took loans, and 84% took loans that featured an over-drafting facility. The reasons for this are because there are several students who have to pay tuition fees along with accommodation, and other living expenses. They have a tendency to take loans when they cannot pay for everything with the income they earn.

This is what causes them to come into the tangled web of debt related problems.

LOAN | Freq Percent

Cum.

Total |

The table above illustrates how two variables namely, student loan and over-drafting system only add to the increasing debts students are in when they graduate. They choose to take loans to get through their studies but reality hits them when they find the situation only worsening and begin to suffer from anxiety and depression.

The survey also investigated students' opinion to the proposed system called top up fees for paying for university education. The reaction to this can be seen through the eyes of the students and the academics.

The academics believe that the top up fees plan is a very positive step in the field of education, since they can use the fees paid by students to further invest on resources, research, teaching facilities. However, 68% of the students believe that the money should be spent on student accommodation and student related activities.

The students feel that the top up fees plan would add to debt making it difficult to support their education. This would also limit the opportunities for intelligent students from lower income bracket from putting themselves through university education.

During the investigation, it was found that nearly 72% of the students are aware of the top up fees plan the government proposed.

It is better to take an in-depth insight into causes of student debt, in relation to the issue in the white paper introduced by the government. The white paper abandoned the grant scheme and introduced the student loan scheme called the top up fee system. This system is problematic because it affects the poor students

Nearly 58% of the students are of the view that paying 3000 Pounds for tuition will just add to their financial burden increasing their debts.

In an article published in the Guardian by Donald MacLeod on April 3rd, he explained how the loan system works. This system allows every UK student to take a loan of 3119 Pounds a year to pay for tuition and would be required to pay back the loan after finishing the course with an interest rate of 9% on an income that exceeds 10,000 pounds. This would benefit the student loan company, which not only gets back the loaned money but also with an addition sum of the added interest. [Guardian, April 3rd]

This problem also persists among students from the United States because they are deeply dependant on the loan system to get through university education. American students take out larger loans than anybody else in the nation. The number of loans taken out rose…