Comment & Analysis
Nov 1, 2017

The Strange Death of Student Loans

Dominic McGrath asks why countries around the world are getting cold feet about loan schemes.

Dominic McGrathEditor
Illustration by Fen Isabella Truitt for The University Times

Something is afoot in higher education. A few years ago, in the Rose Garden of 10 Downing St, soon-to-be Deputy Prime Minister Nick Clegg made supporting income-contingent loan schemes the price of power.

The sheer certainty of income-contingent loans and a fee increase – so fiercely fought against by students for decades – might have made Clegg think twice about sticking to his principled stance.

Today, if Cameron and Clegg were to meet again, the outcome might be different. Around the world, politicians are backing away nervously from a system that for years was hailed as the solution to a higher education sector deemed too big to fund through state coffers alone.


Even Taoiseach Leo Varadkar has come out against UK-style loans, telling an audience in Trinity a few weeks ago of his desire not to burden Irish students. Fianna Fáil have for months wavered on loan schemes, repeatedly making clear its scepticism, even if the party hasn’t been forthcoming with other ideas.

It might be too early to pronounce them dead, but student loans are certainly far from rude health

But why? University heads – who have typically favoured loan schemes – might pin the blame on UK Labour’s Jeremy Corbyn. This year’s general election saw him run with the anti-loan rhetoric, triggering more hand-wringing among a political class that has always been chary about a publicly funded system.

Yet, such an explanation is too simplistic for a debate that has been raised by leaders across the world, from Bernie Sanders in the US to, more recently, newly elected Prime Minister of New Zealand Jacinda Arden.

In August, she told students: “Our job isn’t to gaze into a crystal ball to predict the type of work you will do, which is going to be amazing. Our job is simply to help you prepare for it.”

It might be too early to pronounce them dead, but student loans are certainly far from rude health.

Of course, loans are something of a misnomer in this debate. As Bahram Bekhradnia, President of the UK Higher Education Policy Institute, tells The University Times, “those opposing loan schemes are actually opposing fees”. Around the world, from the UK to New Zealand, such a distinction has little import. Loans – which offer the whiff of mortgages, debt and corrupt bankers – make a useful shortcut for the students and politicians who favour free education.

In Ireland, however, the distinction is telling. Varkadar can rail against loan schemes, while Micheál Martin can offer quips on Fianna Fáil’s fears, all without touching the real issue of fees. For Bekhradnia, such a system of high fees and no loans – like the one in Ireland – is “immoral”.

Varkadar can rail against loan schemes, while Micheál Martin can offer quips on Fianna Fáil’s fears, all without touching the real issue of fees

But this isn’t the full picture either. Even if the language of loans and fees is slippery, this doesn’t explain why, now, so many parties are getting cold feet over a system that for so many years contented university heads, politicians and policymakers.

Trinity College Dublin Students’ Union (TCDSU) President Kevin Keane might have suggested recently that the campaign against loan schemes “has lost steam nationally”, but, talking to senior politicians and student leaders, the mood has never been more prevailing: loan schemes are a political faux pas waiting to happen.

Part of the answer might lie in the strange application of loan schemes around the world. “Free-market ideology” played a role, according to Bekhradnia. Twenty years ago, loan-scheme proponents might have felt safe in the knowledge that history and hope were rhyming: students were happy to stump up thousands for their education, glad to have loan schemes as a crutch in a system where negligible state funding was becoming the new normal.

But since then, successive years of policies have turned loans from a crutch into an assault on students. And this is where the anti-loan rhetoric of Corbyn and Arden has found a receptive audience.

Complex arrangements, opaque regulations and no real fee ceiling have prompted calls for a re-think from the most middle-of-the-road politicians. All the economists in the world, once loans become toxic, can’t convince politicians the merits of loan schemes. At the Oireachtas Education and Skills Committee earlier this year, economists talked until they were blue in the face about the equity of loans. Months later, it’s clear no one was listening.

This isn’t to say loan schemes aren’t going to be resurrected. It’s been said before that loan schemes need a champion to present them as progressive. Better marketing might not be enough, however. For a product this badly damaged, we might not be surprised if they’re taken off the market altogether soon enough.

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