The Student Debt Reduction Solution (SDRS)

Students starting university this year will be subject to the new level of tuition fees. From September of this year universities have been able to charge up to £3000 a year for tuition, which is an increase of £1800 on previous years. This is also set to further increase to £3070 a year for students starting in September 2007. There are of course some exceptions to this including students who opted to take a gap year in 2005/2006 who will be charged at £1200 a year and subject to the old scheme even though they are starting at the same time as those paying the higher rate. Resulting in a temporary two tier HE funding system.

The new system introduced this year looks to offset the increase in cost in two ways. Firstly repayments will not commence until the graduate is earning over £15,000 a year an increase on the earning threshold for repayment of previous years which stood at £12,000. The weekly repayment has also been reduced but this has only been achieved by extending the terms of the loan over a longer period.

This new system in effect actually increases the level of debt students can incur through tuition fees and prolongs the repayment period. Surely rather than extending the repayment period and raising the level of debt a more logical approach is to reduce the total level of debt. This is the view of the independent student website mexico.thestudentzone.com.

To further its view The Student Zone will be meeting with Shadow Higher Education Minister Boris Johnson on the 19th of October to discuss the Student Debt Reduction Solution (SDRS). The SDRS has been trialed with great success and utilises the spending power of students and their immediate families to reduce the total amount of debt. The basis of the solution is similar to that of a loyalty card systems that have already been used in the private sector as a reward system with great success and is a concept that is both familiar and popular with the public. The difference with what will be known as the Student Debt Reduction Card (SDRC) and current loyalty card systems is that when SDRC card holders, students and members of their family, use the card in conjunction with a purchase at participating stores and companies including online businesses a percentage of the purchase value is added to the students SDRS bank account. The balance of which will be offset against the total debt the student has incurred at the end of their higher education.

From the incredibly successful trial it is estimated that this will mean a 50% reduction in debt incurred through higher education. Whilst this does not remove the overall problem of debt incurred through education it is a significant step in real terms to reducing the cost and therefore leading to larger proportion of the population receiving a university education. This can only lead to a more productive, skilled and prosperous economy. To echo Mr Blair’s initial mantra “education, education, education”.

It is hoped that the meeting with the shadow higher education minister will be the first step to making the SDRS a reality and prompt support from other members of the shadow cabinet and members of parliament.