should France be inspired by it?

On August 24, 2022, US President Joe Biden announced the partial cancellation of student loans, as he had promised in his presidential program. The situation was becoming critical in the United States as the amount of student debt had tripled over 12 years to reach over $ 1.6 trillion. In a tweet, the Democratic president announced his plan “with the aim of giving working-class and middle-class families a break as they prepare to resume federal student loan repayments in January 2023.”

The measure would cross $ 10,000 off the list for people who did not receive a federal scholarship as part of their undergraduate studies and $ 20,000 for more modest people who received one. In all, the measure is expected to allow 15 million people to fully cancel their debts in a country where nearly 43 million borrowers have to repay an average student debt of $ 40,000. However, a study from the University of Penn Wharton points out that it would benefit the richest: ” About 70% of debt cancellation goes to borrowers in the richest 60% of the income distribution The study concludes.

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Less borrowing in France

In France, the issue of student debt cancellation has never assumed such proportions. This is underlined by a Senate report of 2021 “Student loan use is still relatively underdeveloped in France”. At the same time, deplores the difficulties of aggregating data on a national scale and finds “It is regrettable that the phenomenon of student debt remains so poorly understood”. According to a national survey conducted by the Student Life Observatory (OVE) in 2020, bank loans represent only 2% of the average monthly resources of French students. According to UNEF, students take about 300,000 bank loans each year, or about 10% of the student population. However, due to the increase in tuition fees in some schools, inflation and the increase in the cost of living for students, estimated by UNEF at more than 6%, student unions fear a greater importance of these loans. Would a measure similar to that of the Biden government then be possible and desirable in France?

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For the president of the Federation of General Student Associations (FAGE), Paul Mayaux: “Biden’s decision affects us because it shows that contracting loans is not a good solution. The students who come to find us in difficulty and who ask us for help in taking out a loan are mainly those of the lower-middle classes. Those who do not meet the scholarship criteria, whose parents are unwilling or unable to help. They are the ones who work alongside or who we have already seen in our social and supportive food stores. The problem is that it happens very often that these students interrupt their studies to repay the loan they had taken out … “

Special case of business school

The 2021 Senate report notes that in France “ the use of the loans would vary according to the type of course chosen, the students of the Grandes Ecoles make more use of loans than those of the universities ”. According to OVE, in fact, in 2016 the share of students who took out a loan was higher in business schools (11%), ahead of engineering schools (6%) and universities (4.5%). In these business schools, however, where there is a greater share of students from the most privileged classes, a significant part still has to go into debt.

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This question of the loan arises when these schools promise an important salary at the end of studies, more than 36,000 euros gross per year on average in first employment according to the conference of the great schools. The National Office of Management School Students (BNEM) has determined that 57% of management school students go into debt to finance their course. “ Don’t assume that all business school students have no money problems explains Romain Vismara, president of BNEM, in our survey of the top 25 business schools, 52% of respondents admitted they have funding problems. Most want a loan, so go through college partners, but 45% apply for a state-guaranteed loan. But there are quotas and many don’t get them. “ The main reason for this debt? The often exorbitant cost of these private schools: on average in three years, 35,000 euros. And the trend is not reversing. Between the beginning of 2015 and the beginning of the 2021 school year, tuition fees increased by an average of 24% in business schools.

Addressing the causes of debt

Of course, student debt is not, for the moment, a big problem in France. However, some campaigns to promote student loans to finance higher education. In April 2021, the influential liberal think tank Institut Montaigne recommended increasing university tuition fees while facilitating access to certain loans. Currently, the French system is based on a structure of public support for students through direct or indirect aid, which has so far made it possible to protect themselves from excessive student debt. In light of the American example, it now seems more pertinent to think about how to avoid an increase in student debt in France.

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In particular, a rethinking of the business school model and their funding should first be considered, argues an economist specializing in higher education. A real modulation of tuition fees based on the income of parents or students would allow, for example, to share the costs more equitably, and to put an end to the inequalities of those who start their working life with the sword of Damocles hanging above. of them overhead. More generally, and in the face of the rising cost of student living, the extension of the scholarship system and its increase seem to be a much more effective measure.

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