Apparently America isn’t the only country with a student debt problem. As America attempts to avoid the crisis by looking to taxpayers for assistance or changing the types of repayment, the UK is taking a different approach.
The UK is tired of the burden European students are putting on the taxpayer. In order to claim assistance from their government, currently students have to be a resident of the EU government for three years, which the UK is thinking about changing to a five-year requirement. Additionally, the amount that students used to be able to claim for tuition and living expenses was rather substantial, and seems to have been taken advantage of as the student population went from claiming £75 million for the 2009-2010 academic year to £162 million for the 2012-2013 school year. The government hopes that the new five-year requirement will cut back on the amount of students who can make these claims, decreasing the total amount borrowed from taxpayers.
Interestingly, the repayment system is run through the tax system. Therefore, British students automatically repay their loans through the UK tax system. Unfortunately, this same system is not in place throughout mainland Europe; therefore, many Europeans are leaving the UK without repaying their debt, causing a multi-million pound tight spot for the UK government. They expect the residency requirement to also help solve this problem.
What do you think of the UK’s student loan approach? Should we implement any of these ideas to our own federal student loan system or do you think this just opens a whole bunch of other issues?
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