“Students suffer from debt constraints while states weigh on their public finances”

GrandstandThe Institut Montaigne publishes a report in which it takes up what the close advisors of the President of the Republic, Emmanuel Macron, had already recommended to him during the presidential campaign of 2017: the increase in tuition fees and the establishment of “Conditional repayment loans”or loans taken out by students during their studies, repaid once in their working life, with suspension of repayments when the debtor’s income falls below a threshold of 1,500 euros per month.

There is nothing innovative about this proposal: it has been implemented in several countries, particularly Anglo-Saxons, with a disastrous record. It leads the United States to deal with a colossal student debt of $ 1.7 trillion in 2019 (the second residual debt after mortgages), a possible cause of the next financial crisis.

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Australia has relied on this model to create an export education market – education has become a normal export business that, in normal times, earns foreign currency. But the building risks collapsing with the Covid crisis: with 260 thousand fewer foreign students, the country will have to face an income loss of 18 billion Australian dollars.

The limits of a student funded system

In England, as in the United States, many universities – even prestigious ones – are struggling to ensure their survival by firing workers, while others simply file for bankruptcy. Obviously the crisis – health today, economic or financial tomorrow – shows the dangers and limitations of a student-funded system.

From this point of view, conditional repayment loans only worsen the situation: students suffer the constraints of debt while the states, by providing their guarantee for these loans, weigh down their public finances. In England, the Institute for Fiscal Studies shows that it may be cheaper to finance free education directly from public funds … than to finance the bankruptcies of students who are unable to repay their college tuition!

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Why so much stubbornness in wanting to promote “solutions” in France that have proved their harmfulness elsewhere? How to explain that such a proposal comes after a year of pandemic, when the situation of students is more degraded than ever? All the more so since, nowhere in the world, have the sums raised made it possible to finance a scholarship system based on social criteria.

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