Student Loans: The Big Debate

Abstract

In the public policy debate over the funding of higher education, student loans tend to be ‘the elephant in the room’, while the desire to create a perfect economic model of funding overshadows the actual impact of such funding decisions on individuals. Without a doubt, loans and repayment terms are the most pressing issue for students in countries that have tuition fees at the tertiary level, such as the United Kingdom, with the exception of Scotland, Chile or the United States. Coupled with rising unemployment levels and low earnings during the early years of professional life, more and more young people are forced to default on student loans early after graduation. While one could argue that this demonstrates the financial illiteracy of young people and the poor career choices they make while at university, this chapter proposes an alternative view.