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This is simply entirely and wholly gorgeous

The Guardian, FT and others have reported this morning on a new report from the Institute for Fiscal Studies on the cost of student loans, which is another ongoing neoliberal scandal within the UK economy.

The details of the report do not matter greatly. What the IFS suggests is that because of the rise in interest rates, the government is now bound to lose money on student loans in the future. The obvious conclusion is that, yet again, we need to return to an era of near-zero interest rates because nothing else serves anyone in society so long as high taxes on wealth suck the unearned gains to those with assets back into the public realm. The IFS do not say that, of course.

That penultimate sentence. Eh?

But note what his insistence is. That we should have negative real interest rates all the time. Ignoring that money has that time value. Ho hum.

But this opened another question for me. I have been wondering whether to include student loan repayments in the Taxing Wealth Report 2024 since they are, in my opinion, a highly discriminatory tax that few with real wealth pay as the wealthy cover their offspring’s debts.

But now think about this. The report is that student loans lose the government money. Therefore they’re subsidy. But the wealthy avoid this subsidy by paying off the fees and not borrowing the money and gaining the subsidy. This is bad because – well, because the rich don’t gain the subsidy?

Sheesh.

11 thoughts on “This is simply entirely and wholly gorgeous”

  1. What he fails to mention in context is why Student Loans were introduced. It was directly due to the absurd notion from the then Major government that 50% of people needed to go to university, one assiduously promoted by every government since that point.

    Because we have ‘degree courses’ utilising failed accountants who teach what are little more than conspiracy theories or patently false ideology then we haven’t got enough money to ‘fund’ that largesse.

    If we were to close the institutions employing such people as lecturers and to remove such courses I’d hazard its possible we could return to the prior method of funding.

  2. Thieving off savers to bail out debtors is his normal mode. On the other hand it’s been government policy for the past couple of decades, so who can call him wrong?

  3. wasn’t that 50% target a Blair thing?

    That’s how I remember it, too, Herr Wisent. But we must remember that Blair lifted many of his ‘best’ ideas from the Major administration.

  4. TMB

    You are probably right – the change of Polytechnics to Universities was definitely a Major ‘accomplishment’ though (and the reason I know this is I rang the ‘University of Luton’ after my results were received to inquire whether my grades were adequate – when I told them my grades they hung up on me) – so they had been given University status in the fag end of that government.

    The 50% target could well have been Blair – a man probably not quite as evil as Murphy but certainly amoral to an extreme degree….

  5. The Meissen Bison said:
    “VP – wasn’t that 50% target a Blair thing?”

    Didn’t Major introduce the concept of the target, but at a slightly lower level (40% or something like that), and Blair merely increased it?

  6. I (Abdual Racare) managed to get a comment through challenging him about his desire for negative real rates.

    I think it went over his head though.

  7. Stuart Caldwell

    I notice in his reply he confirmed his support for Hamas and even Islamic State by calling for the abolition of interest so it was a worthwhile foray….

  8. ISTM there are parallels in China. Large number of graduates, but huge youth unemployment because there are not that many graduate jobs. Far too many subjects have been elevated to “degree” level, which serve no purpose, when on the job training would be better.

  9. TBF the interest rates on student loans have historically been kept a bit higher than they arguably ought to have been, so in terms of time value of money the students who don’t pay their loans back are indeed getting a subsidy (a chunky slice of tuition fees they don’t need to pay for) whereas those students who get into a high-paying job and stick at it for long enough will pay a little over the top.

    If the upper middle classes are paying off their kids’ fees, it’s a fairly logical move provided they think their kids are destined for good careers. Not foolproof though – if their kids decide to run off and work a low-paid job, or get preggers and leave the workforce before they hit 30, or get struck down by a long-term illness that makes them unable to work or prefer to work part-time, or get run over by a bus and die, then in all those circumstances they’d have been better off with a student loan they don’t need to repay, rather than unnecessarily handing over the fees up-front.

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