Debt & Bankruptcy Issues in the UK

Scotland will be abolishing student fees while graduates in England are facing debts of £30,000 because of the new £3,000 annual top-up fees according to a recent announcement.

Scotland's education minister, Fiona Hyslop, says the fees prevent young people who come from poor families from going on to college because they fear getting into debt. Scottish students attending universities in Scotland will be able to obtain undergraduate degrees free, however, students from England and Wales will pay £1,700 a year for Scottish studies except medical courses, which will cost £2,700 annually. Degrees from the more prestigious universities such as Edinburgh and St. Andrews will be free for students within the European Union and must be treated the same as students from the local area. Under European law, only a variation within nations is allowed but not between them. Approximately 15,000 students from other parts of the United Kingdom are attending universities in Scotland. Scottish students who choose to study outside of Scotland will have to pay the entire £3,000 top-up fee.
The Scottish Executive's budget will finance the move and comes on the heels of a warning from student leaders in England that new graduates will be faced with debts of £30,000 because of the new fees that began in September of last year. The Student Loans Company reported a sharp rise in student loans -- £3.4 billion through last April compared to £2.8 billion in the previous year.

Scottish students currently pay a much smaller contribution to the cost of their education than students in England. Scottish students pay an "endowment" of £2,289 in the April after they graduate. The purpose of the endowment is to provide grants for the poorest students. This support will continue, and financing for the £15 million cost will be paid by taxpayers.

As part of the abolishment of a fee structure, Scottish Parliament was told that current and future students will no longer have to pay the endowment fee. New legislation is in the process of drafting for the fall with hopes of implementing the change by April. During the three years that the program has run, only about a third of students paid the fee directly; the rest added it to their student loan. The money from the endowment fees was used to provide support for the poorest students, but the Ms. Hyslop sees that it is an inefficient way to generate money for student support. She says education should be contingent upon the ability to learn rather than the ability to pay. She also says that it is wrong for graduates to begin their new careers with financial pressures hanging over their heads, thus preventing them from contributing to a wealthier and fairer Scotland.

Another thing that is changing according to Ms. Hyslop is that student loans for living costs are being eliminated in favour of a grants system that will pay off all accumulated debt of Scottish students, which is estimated to be between £1 billion and £2 billion. Both policies are long-term Scottish National Party election pledges and will be reviewed at the next spending review in the autumn when the Scottish Executive's £30 billion annual budget is determined.

The National Union of Students says that Westminster must adapt the same policy as Scotland regarding free higher education. British students are feeling twinges of jealousy over the Scottish Executive's proposals to eliminate the graduate endowment scheme according to NUS president, Gemma Tumelty. She states they have campaigned for a long time for publicly funded higher education, and they support the SNP's commitment toward that goal.

The NUS feels that decision-makers at Westminster have underestimated the impact of student debt and their long-term capacity to save and buy a home. They are pleased that concerns over student debt levels have contributed to the SNP's recent decision to do away from the graduate endowment.

Student debt in England increased by 4.8 per cent in 2005-2006, the year prior to top-up fees being introduced. The highest debt level was at Imperial College in London where students graduated with an average debt of £16,100, followed by University College, London at £13,400, and London School of Economics, £13,100.