As student debt crosses the £100 billion mark, Labour leader Jeremy Corbyn has come under fire this week for appearing to backtrack on a pre-election ‘promise’ to wipe out all historical student debt. The accusation is a product of fake news, created by the Conservative HQ and peddled initially by the right-wing press. However, with the MSM’s power to form the BBC political narrative, the accusations made it onto today’s Andrew Marr Show (23/07/17).
What Corbyn promised in the snap election campaign was to abolish student fees, and restore maintenance grants. You will find no declaration to wipe out existing student debt in the red booklet. Instead of the Labour manifesto, Conservative HQ are seizing on comments Corbyn made to NME before the election:
“Yes, there is a block of those that currently have a massive debt, and I’m looking at ways that we could reduce that, ameliorate that, lengthen the period of paying it off, or some other means of reducing that debt burden.”
“I don’t have the simple answer for it yet – I don’t think anybody would expect me to, because this election was called unexpectedly; we had two weeks to prepare all this – but I’m very well aware of that problem,”
In the interview snippet above, Corbyn declared his ambition to deal with student debt. Listening to the interview and reading the transcript, it is clear that it wasn’t a promise. The Labour leader admitted he didn’t have the answers or the costings, but suggested a list of ways that could be investigated to reduce debt burden.
Full interview with NME below:
The accused backtracking comes with the revelation that student debt in the UK has crossed the £100 billion line. By the next general election, the debt is forecasted to swell to over £200 billion, dwarfing all other forms of private debt in the UK. Having ballooned to such a high figure, it’s no wonder Labour have had to reel back their aspirations for tackling it.
The real news here, is that the Conservative government (and Blair gov.) have allowed the creation of a monstrous debt bubble to grow unnoticed. The £9,000 tuition fees were introduced to properly fund our university education system, but all they’ve done is create a debt time-bomb for 30 years onwards.
It is estimated that 45-60% of student loans will never be paid off in the 30-year repayment period. Assuming student debt stops growing after 2023 (it won’t), that could equate up to a £120 billion financial blackhole for the tax payer.
The prospect of a wiping off £120 billion debt with public money, is only more frightening when combined with the privatisation of the student debt book. That’s right, private investment firms are setting themselves up to reap huge financial rewards in the future – when the government is forced to wipe off gargantuan levels of debt.
George Osborne has already sold off the student loans book for students who began studying before 2012, for a neat sum of £12 billion to plug the hole in his austerity budgets. Since then interest rates have skyrocketed to 6.6% per annum, meaning a £45,000 loan would end up costing the student OR tax payer £115,857 in total. With this formula of buying student debt cheap, and racking up the charges, it’s easy to see why fat cat investors are keen to get their hands on it.