[koolba]

The argument for it is that without it a graduate with a large balance could default on their loan immediately after graduation. The classic example being a surgeon getting hundreds of thousands in loans for medical school, and then skipping out on paying them back when they begin making bank as a doctor.

[raverbashing]

Yes and it's a BS argument, because going through bankruptcy is not something to be taken lightly or something that you can "just do", because it's not only about "you owe X" but how well can you service your debt.

Of course this argument was an excuse to inflate education prices and make lenders more interest as well.

[istjohn]

I'm honestly curious why this isn't a problem in the UK. What are we missing?

[lawtalkinghuman]

Historically, it is because UK government-backed student loans (for English students: no student fees in Scotland after all) are (a) low-interest, (b) only repayable on money earned above a particular salary threshold, and (c) automatically gets written off eventually after a specified period (was 25 years, now 30 years).

(a) is arguably not really true anymore (given some graduates are paying 5% interest), but (b) is even more true now than it was under the old (Plan 1) scheme because the salary threshold is now £27,295 (compared to the old one of £19,985).

[alasdair_]

When I went to university in the UK for CS (20 years ago), my total student loan debt was close to zero. Indeed, they gave me money to study.

Even now, the cost for something like a medical degree is negligible compared to the USA where $400K for medical school and undergraduate is not unheard of. (A medical degree is an undergraduate degree in the UK)

[lmm]

UK student "loans" aren't dischargeable in bankruptcy either - legally they're a tax rather than a loan.

[reitanuki]

Thank you! A lot of people seem totally incapable of grasping the fact that it's more of a tax rather than a loan. I'm glad it's not just me who has remarked this — I've been very unsuccessful in explaining it to people who shudder at it and treat it as any other loan...

[dragonwriter]

It’s not a problem anywhere, it was just an excuse for a handout to the financial industry in 2005.