Student loan scandal might put people off having children, Kemi Badenoch says
Kemi Badenoch said student loan debt can keep people from having children.
The Conservative leader described it as a “huge burden” that leaves many graduates feeling financially insecure and could delay them starting a family.
In an interview with IndependentShe also revealed that if she had had to take out similar loans for her education, she would have been left with £100,000 in debt, which would have taken “forever” to pay off, and she may have struggled to buy her first flat, which could have led to her meeting her husband.
While determining his party’s policy of reducing loan interest rates, he also talked about his concerns about the future of his own children, including his own children who will turn 18 in five years.
His warning comes a year after education secretary Bridget Phillipson said Britons should consider having more children, which she said were being put off by high living costs.
Ms Badenoch said if she had taken out the ‘Schedule 2’ student loan, available to students going to university between 2012 and 2023, her debt would likely have been around £100,000.
“I think it will come out with around £80,000… and the debt will probably be around £100,000 at current interest rates. I think that’s quite wrong.”
Asked how long it would take for it to pay off, he said: “Well, probably forever, because I think psychologically, the idea of having this thing like a millstone around my neck all the time would be pretty heavy.
“But I also took out a mortgage for a flat when I was 27, which I probably couldn’t have done with the way interest payments on loans work now.
“So I might not have been able to get my first apartment. That might have been harder. In that first apartment, I met my wife who lived next to me. I may not have even met the person I was with. So obviously it’s a personal experience. But I think having debt is actually a very heavy thing for people to carry.”
Asked whether this affects the country’s birth rate, he said: “I wouldn’t be surprised if it indirectly affects the timing of people starting a family.
“Most people don’t want to start a family until they feel financially secure, and I think that’s one of the things that’s a huge burden for a lot of young people.”
He said he “kept putting myself in the shoes of what a 26 or 27-year-old is dealing with today.”
“I don’t think it’s fair. But I have three children now. My oldest will be 13 years old and in five years he will be 18 years old. I started thinking, what kind of courses will be opened? What will artificial intelligence do? I think a lot about the future and I want people to know that if we continue to focus only on what happened yesterday, we will never give young people a better future.”
She added: “I had a student loan. It took me about eight years to pay it off. It would be absolutely terrible to think that I could still pay it off now and it wouldn’t go down. That’s why I want to see change in the system.”
Interest on Plan 2 loans is charged at up to RPI (retail price index) inflation plus 3 per cent, depending on how much the graduate earns. Following Rachel Reeves’ November budget, the salary threshold at which repayments start under the Plan 2 system will be frozen for three years, leaving some people having to pay more.
There are widespread concerns about the cost of loans, with pressure mounting on the Treasury to find a way to reduce costs for graduates.
The Conservatives have announced plans to limit this to the RPI only. Ms Badenoch said her party would pay for the policy by funneling money into courses that offer young people “very, very low value” and most of which should be apprenticeships, not degrees.
He gave examples of clock making and flower arranging lessons.
“These courses, you don’t actually need a degree to do this. One example I heard about today was horology, which is watchmaking. This is not a degree level course,” he said.
“You have to do an apprenticeship to learn clocks. You don’t need a three-year degree and writing articles for that. Flower arranging… I mean, they make golf studies seem very cerebral. These are not college degrees.”
He added: “A lot of people think we’re talking about arts versus science. It’s not like that. It’s real technical stuff, skills that don’t require £9,000 a year to learn, and people taking out loans that they’ll never be able to repay. It’s not fair to students. It’s not fair to taxpayers either because most students will never be able to repay the loans and taxpayers will have to pay back. It’s not right.”
He also said he would “argue” about the issue after crashing a TV interview with money-saving expert Martin Lewis about his plans.
“I think he’s looking at how we can make repayments easier,” he said. “I look at the whole system, where are the areas that need to change?”
A government spokesman said: “We inherited the system of student loans designed by the previous government, including Schedule 2. Threshold freezes were introduced to protect taxpayers and students as well as future generations of students and workers.
“The student finance system protects low-income graduates by determining repayments based on income and outstanding debt loans and interest is canceled at the end of the repayment terms.”
