'Confusion' over student loan and credit card borrowing
Too many young people equate student loans with credit card-style borrowing, an economic expert has warned.
'Confusion' over student loan and credit card borrowing”
Times Higher Education reports Nicholas Barr, a professor at the London School of Economics, fears too many undergraduates are unaware their higher education funding is repaid out of future earnings.
Speaking at an Institute for Fiscal Studies conference in Cambridge last week (April 3rd), he said: "The big impediment in Britain is [that] so many people… still conflate Student Loan Company debt with credit card debt. But this isn't credit card debt, it is a payroll deduction."
Professor Barr added overcoming this ignorance was crucial before the government attempts to raise the cap on undergraduate tuition fees.
He also suggested the rate of interest on student loans be increased to cover the government's borrowing costs, but only if subsidies were available to low-income graduates or those with caring responsibilities.
Professor Barr's comments follow a recent survey by NatWest which revealed young people are getting better at money management with around 86% of 12 to 19-year-olds keeping track of their finances.
Written by Sam Dawson ©
