How to Reduce the Debt Burden of British Students to Pay for Higher Education - Research Paper Example

HIGHER EDUCATION IN THE UK Introduction In recent years the increasing cost of higher education in the United Kingdom has been hotly debated. When compared to the early and late 80’s the cost of higher education throughout the country has increased by many folds, thus denying many capable and talented students of a high quality higher education and putting a lot of pressure on families and individuals who were determined to gain a higher education. While this may not be a phenomena that is common only to the United Kingdom it is indeed a problem as such an increase in higher education costs when compared to other countries in the European region means that in the future the United Kingdom may not have an adequately educated population – thus such increases in costs will be detrimental to the future of the United Kingdom. Having said the above the objective of this particular research study is to understand the break up of costs that are incurred by students who pursue higher education and to understand if there is a difference in the amount of debt and expenses that are carried by individuals based on their gender or age. In this research study we also aim to understand the optimism or concern shown by individuals with regard to their levels of debt. Review of Literature Due to the increases in the cost of higher education many poorer individuals have been found to opt out of higher education (Galindo-Rueda, Fernando, Oscar Marcenaro-Gutierrez, and Anna Vignoles, 2004). The study that was carried out to study the connection between socio economic standing and higher education found that when compared to the number of students opting for higher education in the 1994 from low socio economic backgrounds – those opting for higher education in 2001 have been significantly less and this was found to be a direct result of the increase in the cost of higher education and the cost of all related expenses such as traveling, living expenses and accommodation that resulted in an individual pursuing higher education. Further it was found in another study that due to the increase in the costs of higher education the number of students looking for work to supplement their income or help their families with the cost of their education were on the increase. By working extra hours than usual during term time, the students believed they could reduce the debt burden or help out their families who were bearing the cost of their higher education (Metcalf, 2005). A study that was recently carried out found that the increase in the amount of student debt was not related to the students’ bad money management styles or their increased levels of impulsive buying, but rather to their increased levels of education. The higher the education, the higher the level of their debt, the longer the length of their study the higher their level of debt was found to be (Boddington and Simon, 1999). Recent studies have found that the high levels of mortgage debt in the country have not just resulted from exuberant spending habits or bad lending decisions of banks alone but also have been caused by the increased costs of higher education. It has been found that parents with university age children are more likely to re-mortgage their houses in an attempt to educate their children. Further it has also been found that mature individuals who own homes and wish to pursue higher studies would more often than not opt to borrowing funds against their house in an attempt to finance their higher education goals (Brown, Garino and Taylor, 2008). Further it has been found that vocational training spending in the United Kingdom has been on the decline when compared with other countries such as Germany and France, this again is considered to be detrimental to the future of the UK economy as we may not have sufficiently trained individuals who can give the country the competitive edge that it needs (Hart and Shipman, 1991). Last but not least it has to be stated that research has found that students opt in and acquire debt to finance their higher education without much thought to the increased the payment plan, the payment period and their future earnings capacity. As a result it has been found that most students are very optimistic about the debt that they carry and their ability to pay it back. Most students it was found over-estimated their earnings capacity and underestimated the total cost and length of their debt (Seaward and Simon, 2000). How does it connect? The literature that has been reviewed above has indicated to us that the cost of higher education in the United Kingdom has been on the increase in the past decade and a half, thus increasing the financial pressure on students and their families and increasing the level of debt carried by these individuals and their families. The objective of this research therefore was to understand the break down of the costs involved with higher education, understand if there was a significant difference of student debt based on the age and gender of students and last but not least to investigate the level of concern that is shown by individuals with regard to the increased levels of debt that they carry. Method The method that was used to carry out this research study was to interview students pursuing higher education in the United Kingdom. These students were randomly chosen. An equal proportion of male and female participants were interviewed. The questions related to the break down of costs that were incurred by them, the location that they lived in, their age and their concern to the amount of debt that they individually carried as a whole. These questions were designed to test the theories that were put forward by the researchers named in the above section. The theories that were tested in this area were as follows The breakdown of the costs incurred by students pursuing higher education in the United Kingdom The gender breakup and the debt carried by individuals of different gender groups Age break up of students The concern they had with regard to the repayment of their debt Results The results are indicated in the graphs and charts illustrated below Interpretation As you can see from the information that has been illustrated above the selection of male and female respondents for the participation in the research study are equal. The debt that they carry has no significant difference. Therefore it cannot be stated that gender is a determinant of the amount of the debt that is carried by an individual pursuing higher education. Likewise it is apparent that there is a good cross section of the population in terms of age break up. Most of the respondents are in the age group of 19 and there are no students over the age of 27. According to the findings – tuition cost is the single most highest cost that is incurred by individuals and students followed closely by the cost of accommodation. Further a slightly higher number of female respondents have been found to be in debt compared to their male counterparts. A majority of the respondents are from the London area therefore it can be assumed that the cost of accommodation and tuition costs are higher as the living and accommodation in London as well the cost of universities in London is much higher than the rest of the country. Lastly it was also found that as previous research had found, a majority of the individuals were not very concerned about their increased level of debt. The number of those very concerned about their levels of debt were less than two fifth of the entire population that was studied. Since it was not tested why they were not concerned we cannot tell for sure but we can assume that these individuals are not aware of their entire liability or are very optimistic about their future earnings capacity. Conclusions The conclusions that can be drawn from the above findings are as follows The cost of tuition is one of the highest costs that is incurred by students, followed closely by the cost of accommodation. Individuals are not too concerned about their increased levels of debt Such high tuition costs will only result in those with lesser financial means been denied a good education and creating a vicious cycle that they will not be able to break free from Further this can have long term detrimental effects on the future of the economy of the United Kingdom as this may result in lesser trained and skilled workers in the economy when compared to other European nations There is no significant difference between the use of student loans amongst male and female students and therefore there is no disparity amongst the sexes in terms of access to education or access to financing higher education. Recommendations The recommendations of the study are as follows. The UK government should look for creative means to reduce the cost burden on students. Top up payments, grants and scholarships for talented students from low economic backgrounds should be increased Top up payments for vocational training should be increased Universities should be encouraged to offer affordable housing and accommodation to reduce the cost burden on students Due to the increase in the number of students opting for student loans, such loans should be made available at reasonable costs and under conditions that are fair to the student. Works Cited Boddington, Lyn, and Simon Kemp. "Student Debt, Attitudes towards Debt Impulsive Buying, and Financial Management." New Zealand Journal of Psychology 28.2 (1999): 89. Brown, Sarah, Gaia Garino, and Karl Taylor. "Mortgages and Financial Expectations: A Household-Level Analysis." Southern Economic Journal 74.3 (2008): 857+. Galindo-Rueda, Fernando, Oscar Marcenaro-Gutierrez, and Anna Vignoles. "The Widening Socio-Economic Gap in UK Higher Education." National Institute Economic Review (2004): 75+. Hart, P.E., and A. Shipman. "Financing Training in Britain." National Institute Economic Review (1991): 77+. Metcalf, Hilary. "Paying for University: The Impact of Increasing Costs on Student Employment, Debt and Satisfaction." National Institute Economic Review (2005): 106+. Seaward, Hamish G. W., and Simon Kemp. "Optimism Bias and Student Debt." New Zealand Journal of Psychology 29.1 (2000): 17. Read More