Students need education on the new loans

For years we’ve educated our youth into debt when they go to Uni, but never about debt.  Now, like or loath it, it looks like we’re about to have a radical change in how student loans and funding works. That must be coupled with education and the universities themselves need to step up to the plate…

The other day I wrote that I’m petrified the arguments about student funding could kill the next generation’s education.  There’s far too much spin and far too little real information out there. We need tackle that from this point on.

Financial Education is crucial

With fees now likely to be £9,000 it’s time higher education institutions are mandated to take responsibility for their students (or maybe now we should call them customers?) knowledge about how their funding and loans work. 

One consequence of the more direct funding relationship we’ll now have between universities and their students is there is a greater duty of pastoral care over this issue – this needs to be an implicit part of the funding agreement that Unis must sign up to.

This morning I was in another meeting with Justin Tomlinson MP, who’s helping us set up the All Party Parliamentary Group on Financial Education (see MPs join the financial education fights blog). Student funding changes make compulsory financial education in schools even more pressing, creating need to widen the brief to Higher Education Institutions. I believe he’ll to try to ask about this in the Thursday debate, if he gets called.

Of course, teaching students how their loans really work won’t help those put off applying due to misinformation. Yet it will help students know how to ensure their finances are managed correctly, their loans repaid efficiently, and give a wider sense of social responsibility.  

Who better than these institutions of education to educate about institutions finances. There’s virtually no marginal cost, the infrastructure is already there – they have the lecture theatres, the lecturers, the ways to communicate with students and organise it and we’re only talking a couple of hours backed up with universal resources.

For the last few years I’ve been back to my old Alma Mata the LSE (where I’m a governor) a couple of times to do talks on just this subject, as well as doing videos to support Money Weeks at other institutions around the UK. It shows that some do see this as an important add-on, which is a great start but it needs formalising.

At every point in the process we need students to correctly understand how the new funding system will work. When they apply, when they get accepted (why not have a key facts about finance booklet as part of it), when they start university and when they leave before they start repaying.

For years politicians of every party have pushed the finance industry towards greater transparency. Well now the government is set too, because as an enormous personal lender itself – dealing with vast sums of money – transparency for that is needed to.

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