Lots of graduates will never pay off their loans, which is the point

Graduating into a recession is hard; at least you can not pay your loans until you earn a bit.

The Telegraph reported yesterday that "at least 40 per cent of student loans will never be repaid":

Around four in 10 graduates will have their student loans written because they will never earn enough to pay them off, researchers claim.

At least 40 per cent of the cash borrowed by students will never be repaid - a figure far higher than Government estimates have previously suggested.

Ministers had previously believed that around one third of the total students loan bill would be lost as those students fail to make enough money to pay it back.

However, leading university vice-chancellors, who carried out the study for the Institute for Public Policy Research, suggest that the total would in fact be closer to 40 per cent.

This is the second volley I've seen in what looks like a campaign to justify raising the cost of education without raising the actual tuition fees. The first came earlier this month, as the Guardian reported on moves to lower the level at which students would have to start repaying their loans.

Here's what's happening. Tuition fee loans are paid by the Government to the universities; maintenance loans are paid by the Government to the students. The students then pay the loans back, with interest – currently set at RPI plus 3 per cent – until either they have been paying for thirty years, or they have fully paid off the loan. The payments are 8 per cent of income above £21,000, a threshold which was originally planned to rise with inflation, but now looks likely to stay the same in nominal terms, thus increasing the number of graduates having to pay.

A subset of students will, therefore, not fully pay off the loan. This has always been known; the problem is that the initial calculations incorporated the same level of hopeless economic optimism as all the other Government departments (or, to put a more partisan spin on it, the initial calculations did not take into account the fact that the Government's austerity programme would smother the recovery in its cradle). Which means that, rather than a third of students not expected to pay off their loans in full, it is now four in ten – because fewer graduates are employed, and those which are are earning less.

The IPPR report which sparked the Telegraph's piece suggests that one way to deal with the problem is:

The creation of a new generation of cut-price degree courses priced at £5,000-a-year – significantly less than the current £9,000 maximum – for “stay-at-home” students to cut down on the amount of money being loaned by the Government.

The idea is that of students take these courses, then they could be barred from taking out maintenance loans, cutting the overall amount borrowed substantially. Of course, the university would still have to work out how to save £4000 on the teaching of a "stay-at-home" student.

It is clear that the complete mismanagement of the tuition fee increase by this government has left a black hole in the higher education sector's finances. But every suggestion as to how to manage that so far involves putting the burden on students and graduates – and even then, on only the graduates who started university in 2012 or later, who have already paid three times more that the students who immediately preceded them.

In the end, what's happened is that this generation of graduates is experiencing grave misfortune, with the highest levels of youth unemployment since records begin and a prolonged decline in real wages; that misfortune leads to the expectation that record numbers of them will, in essence, default; and much of the response is based around finding ways to extract more money from them anyway.

IPPR's proposal is better than most, in that it is at least looking for ways to save students money; but it still leaves them picking up the tab for the Government's incompetence.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

John Moore
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The man who created the fake Tube sign explains why he did it

"We need to consider the fact that fake news isn't always fake news at the source," says John Moore.

"I wrote that at 8 o'clock on the evening and before midday the next day it had been read out in the Houses of Parliament."

John Moore, a 44-year-old doctor from Windsor, is describing the whirlwind process by which his social media response to Wednesday's Westminster attack became national news.

Moore used a Tube-sign generator on the evening after the attack to create a sign on a TfL Service Announcement board that read: "All terrorists are politely reminded that THIS IS LONDON and whatever you do to us we will drink tea and jolly well carry on thank you." Within three hours, it had just fifty shares. By the morning, it had accumulated 200. Yet by the afternoon, over 30,000 people had shared Moore's post, which was then read aloud on BBC Radio 4 and called a "wonderful tribute" by prime minister Theresa May, who at the time believed it was a genuine Underground sign. 

"I think you have to be very mindful of how powerful the internet is," says Moore, whose viral post was quickly debunked by social media users and then national newspapers such as the Guardian and the Sun. On Thursday, the online world split into two camps: those spreading the word that the sign was "fake news" and urging people not to share it, and those who said that it didn't matter that it was fake - the sentiment was what was important. 

Moore agrees with the latter camp. "I never claimed it was a real tube sign, I never claimed that at all," he says. "In my opinion the only fake news about that sign is that it has been reported as fake news. It was literally just how I was feeling at the time."

Moore was motivated to create and post the sign when he was struck by the "very British response" to the Westminster attack. "There was no sort of knee-jerk Islamaphobia, there was no dramatisation, it was all pretty much, I thought, very calm reporting," he says. "So my initial thought at the time was just a bit of pride in how London had reacted really." Though he saw other, real Tube signs online, he wanted to create his own in order to create a tribute that specifically epitomised the "very London" response. 

Yet though Moore insists he never claimed the sign was real, his caption on the image - which now has 100,800 shares - is arguably misleading. "Quintessentially British..." Moore wrote on his Facebook post, and agrees now that this was ambiguous. "It was meant to relate to the reaction that I saw in London in that day which I just thought was very calm and measured. What the sign was trying to do was capture the spirit I'd seen, so that's what I was actually talking about."

Not only did Moore not mean to mislead, he is actually shocked that anyone thought the sign was real. 

"I'm reasonably digitally savvy and I was extremely shocked that anyone thought it was real," he says, explaining that he thought everyone would be able to spot a fake after a "You ain't no muslim bruv" sign went viral after the Leytonstone Tube attack in 2015. "I thought this is an internet meme that people know isn't true and it's fine to do because this is a digital thing in a digital world."

Yet despite his intentions, Moore's sign has become the centre of debate about whether "nice" fake news is as problematic as that which was notoriously spread during the 2016 United States Presidential elections. Though Moore can understand this perspective, he ultimately feels as though the sentiment behind the sign makes it acceptable. 

"I use the word fake in inverted commas because I think fake implies the intention to deceive and there wasn't [any]... I think if the sentiment is ok then I think it is ok. I think if you were trying to be divisive and you were trying to stir up controversy or influence people's behaviour then perhaps I wouldn't have chosen that forum but I think when you're only expressing your own emotion, I think it's ok.

"The fact that it became so-called fake news was down to other people's interpretation and not down to the actual intention... So in many interesting ways you can see that fake news doesn't even have to originate from the source of the news."

Though Moore was initially "extremely shocked" at the reponse to his post, he says that on reflection he is "pretty proud". 

"I'm glad that other people, even the powers that be, found it an appropriate phrase to use," he says. "I also think social media is often denigrated as a source of evil and bad things in the world, but on occasion I think it can be used for very positive things. I think the vast majority of people who shared my post and liked my post have actually found the phrase and the sentiment useful to them, so I think we have to give social media a fair judgement at times and respect the fact it can be a source for good."

Amelia Tait is a technology and digital culture writer at the New Statesman.