Student debt
The Daily Telegraph (registration required) reports that life is becoming unbearable for British university students.
Average student debt has doubled since Labour came to power.
And the price of a pint in the student union bar has also jumped 58 per cent since 1997, to average £1.89, according to a money guide to campus life.
Variations in living costs, particularly rent, meant some people graduated with debts in the low thousands, while others ended up owing £15,000 or more.
Average debts were building up at £3,523 per year, said The Push Guide to Money 2005-6: Student Survival. Graduates were finishing three, four and five-year courses owing an average of £11,830, up from £5,792 when Labour came to power.
With the introduction of top-up fees two years away, debts were set to increase even more, the guide warned. One in 10 students graduated owing £15,000 or more, while three per cent had debts of £20,000-plus.
The early emphasis on the price of a pint suggests the writer thinks that is essential part of the cost of being a university student. Clearly one that rates taxpayer subsidy.
But I am more interested in the story’s implicit premise that student debt is somehow a bad thing. I am finishing up buying a house, and when my wife and I decided what house to buy, we went through our income and expenses to see how much of a mortgage payment we could manage. Had our incomes been higher, or had we expected big pay hikes in the future (no such luck), we would have bought a bigger house, had a bigger mortgage, and been happier about being more in debt. Schooling is an investment.
I gathered a few numbers from an Excel sheet on the OECD web site. It lists the after inflation growth in average compensation.
1990 -3.4
1991 1.0
1992 0.6
1993 1.7
1994 2.4
1995 0.4
1996 0.0
1997 2.1
1998 4.3
1999 3.3
2000 5.4
2001 3.8
2002 1.5
2003 3.0
These numbers suggest that students have a belief that wage growth is non-trivial, and that going into debt may be worth doing. They are not even remotely definitive, because they are not the numbers I really want. What I really want are numbers on the return to higher education. But a booming labor market is at least suggestive.
My central point remains this: why do newspapers, staffed by people who happily go into debt to buy cars and homes, write as if students are clearly worse off going into debt to pay for university education?