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Some reasons to be wary of student loans

Political personalities or currents who want to consistently increase tuition fees to the university,

Political personalities or currents who want to consistently increase tuition fees to the university, just like what the British Conservatives did and what they are trying to impose (with the setbacks that knows) the Quebec Liberals, give themselves a good conscience by advocating the development of the student loan.

Do they want to install a wall of money at the entrance of graduate studies? Not at all, they reply, using two arguments: young people from modest families would be or remain exempt from all or part of tuition fees and, for the mass of students, the financial weight of studies would be offset by the development a loan system, to be reimbursed after graduation.

Let’s leave aside the exemption for social reasons. As in any field, it is legitimate while having its disadvantages: threshold effects, stigmatization, bureaucratic procedures, etc. And let’s focus on the student loan, brandished both as a way to avoid any selection by money and as a factor of accountability (in short: we do not gabble when we live on the loan).

Debt, a young thing?

Just as the increase in the smic as it is bizarre – contested only by people who run absolutely no risk of being paid the smic, the student loan is a formula systematically put forward by those who ‘will never suffer the disadvantages. Either they have no need to use it for their children, or they can use it safely, their resources being high enough and stable.

For others, it’s not so simple. The student loan was a rather abstract notion until the experience of a close person, in a country where studies are paying, come to confirm the problematic nature. The first obstacle, of a psychological order, is none the less very strong: as the promoters of this formula strive not to understand it, the debt is absolutely not a young thing.

And especially not at the time of widespread precariousness, where it often takes, studies completed, chain years of internships and CDD before finally being stabilized … in an environment where one claims everywhere that the stability is a luxury that we can not afford anymore. From this point of view, the lauders of the student loan are entangled in the contradictions of the liberal discourse: the recourse to the loan would be much more conceivable against a background of classical social guarantees than in the universe that they wish for, where “structural reforms” undermine the obligations of employers visa employees.

A leap into the unknown

Today, even a young person who is doing “reasonable” education in terms of employment prospects expects to experience some years of precariousness first. But borrowing to realize a major life project is a calculation of individuals professionally inserted, stabilized, persuaded to enjoy a certain economic security. In short, the opposite of a student.

And even more the opposite of a young person who is only considering higher education. Who does not necessarily know in advance which ones or how far? Who is looking for? Who has no certainty that his choice will be the right since he has not even started? Who also has no guarantee of success and who has not really experienced either the labor market or university life. In short, a young, what.

Of course, some are the opposite: they know what they want and where they go, have already decided everything, pretty much everything and are certain of their success. But everyone will agree that this profile is both ultra-minority and socially quite typical.

Pretending to interpose, between a bachelor and his future studies, the negotiation of a loan whose terms are fixed on the precise programming of the next years of its existence is a nonsense insignia concerning a person who is just doing all respects a leap into the unknown.

Car title loans

Car title loans sacramento are small, short-term loans that use the clear title of the car as collateral. It is a very expensive form of credit. Any lender will offer a car title loan if there is equity in the car, even if there is no clear title. These loans generally last between 15 and 30 days and are calculated using a three-digit percentage (APR) that is significantly higher than most credits. Car ownership loans typically represent between 25% and 50% of the value of the vehicle. On average, the loan amount is between $ 100 and $ 5,500. But they can earn $ 10,000 or more from some lenders.

Insecure two generations at a time

For the person concerned, it is an artificial proposal, veneered, unreal. Presented as a condition to take or leave to begin studies, it is also a way to extort one’s signature. The conclusion of a student loan places young people in the nets of the banking system. The young person and his parents or relatives, necessarily joint guarantees. Because the bank, as for any loan, seeks to give the maximum guarantees. Evaluating, weighing, claiming force documents, showing an inquisitorial indiscretion.

By also applying the cultural prejudices and bureaucratic absurdities of the banking system, which can be spectacular. It is better, for example, that a young person does not have artist parents: even if rich, an artist will always be for a bank a poor person. And it is better for the young person to engage in reputable and fast-track studies whose only statement is to speak to the banking profession.

The bonds, very banal, are prevented: in case of failure of the young, the recommended letters will fall dry. Between the conclusion of the loan and the possible failure of the student, parents-sureties bank has an interest in not suffering an economic accident. Or how to insecure (there are some who would say “empower”) two generations at a time …

State intervention

Admittedly, it might be objected that this description relates to an ordinary, purely private student loan, in which the State does not intervene in any capacity. However, wherever the public authorities have sought to develop student loans, the state intervened either to improve the rates or to provide its guarantee, or both. But one could argue in return that these different methods of state involvement have never removed the obstacles to the development of student loans.

In its version guaranteed by the State, the student loan is in France, historically and contrary to popular belief, rather a left project. The “student social plan” developed in 1990 by Lionel Jospin, then Minister of Education, provided for its massive development. The Ministry was considering 80,000 to 100,000 loans for the first year of application, followed by a four- or five-year increase to approximately 400,000 loans.

But the combination of the reluctance of the young and the resistance of the banks made these projects go up in smoke. Not only did the Ministry of Higher Education account for about 60,000 student loans (out of 2,250,000 students) in 2008, but it was mostly “normal” loans, ie resources and requiring a deposit. So, noted the ministry, “in fact, they are primarily intended for students of the grandes écoles.”

“Discrimination through access to the loan”?

In 2007, the Minister Valérie Pécresse announces a project to “end the discrimination by the access to the loan between students of the university and the grandes écoles” by setting up a student loan without surety, supported by a guarantee of State. The project culminates in 2008: a loan of 15,000 euros, granted without any means test and without parental or third-party guarantee, the risk of default being covered by the State by 70%.

The objectives are then to reach 60,000 loans in 2009. But once again (the financial crisis probably having arranged nothing), the forecasts do not come true: in the course of 2009, only 2,800 loans had been granted by banking networks engaged in this scheme.

In January 2009, a bill signed by 92 UMP deputies (out of a total of 310, plus 7 related) takes note of this failure and calls for the establishment of a new type of student loan totally guaranteed by the State, to be reimbursed. deferred (once the studies are completed) and conditional (starting only at a certain salary threshold and stopping when the remuneration falls below this threshold).

First step of the “paying university”?

This idea of student loan repayable according to the remuneration of the borrower, however, is embedded in the explanatory statement of the proposed law, a caricature, referring to Britain, Australia and the United States. New Zealand. Three countries where the principle is not or no longer that of free higher education.

Result of this right-handed rally: passed unnoticed, the bill is, three months later, in full academic movement against the law LRU, emerged from anonymity by some participants in this movement and presented, in a very controversial way, as the imminent first step of the “paying university”. Charging in this case quite abusive with regard to the actual content of the proposed law (which has joined the cemetery of parliamentary bills, not to be confused with bills from the government). But accusation referring to the origin of the student loan and sanctioning persistent ambiguities of some of its current promoters.

The original idea of the borrower’s income-tested student loan comes from ultra-liberal economist Milton Friedman of the University of Chigago, who wrote it in 1955 in an essay entitled “The Government and Education”. “. The student loan has since been implemented in various ways in the world, but it is only necessary in countries where higher education is indeed (too) expensive.

A choice or an obligation?

This is why the suspicion easily settles as soon as a political speech makes the apology: is it to prepare the ground at the end of the (still relative) gratuity, or simply to improve a mode of funding among others of student life?

The development of student loans can replace grants and may be associated with higher tuition fees, but this is not inevitable. This formula can perfectly suit certain studies and profiles and allow its beneficiaries not to work at the same time. From this point of view – and provided, also, not to underestimate its mental discomfort and material risks – the student loan remains one of the legitimate forms of individual funding for higher education. But this positive side of early borrowing is noticeable unless the choice exists, that is, if the level of university fees does not equate with an obligation to borrow.

Two types of proposal should not be confused: on the one hand, the existence of student loans as a tool among others in a wide range of public and private funding mechanisms for studies, and on the other hand the political proposal for liberal inspiration that constitutes the “generalized student loan” as an alternative to free study.

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