Student debt levels exaggerated, says US expert

Rising levels of student debt in the US are not creating excessive burdens for most borrowers, a symposium in Oxford heard yesterday.

The level of public alarm about student debt was "unwarranted for most students", said Sandy Baum, senior policy analyst at the College Board, which runs the American Sat tests for university entrance.

But she warned that graduates from poor families were having more difficulties in repaying their student loans. They reported lower earnings after college and could not expect help from their parents with expenses, such as the deposit on a house. They might also have to contribute to the family budget, she said.

The generally upbeat message from Professor Baum, of Skidmore College, on the basis of American experience of decades of student loans and rising tuition fees was in stark contrast to the fears expressed by Louise Archer, of London Metropolitan University, who said the UK government's introduction of variable fees would be "disastrous for social equity and justice".

The symposium of British, French and American academics was organised by the Oxford Centre for Higher Education Policy Studies and the University of California Berkeley to look at funding and access as the UK moves into the uncharted waters of variable tuition fees for undergraduates.

Professor Baum pointed out that despite the massive headline figures - "sticker prices" - for ivy league universities in the US, most students go to cheaper public universities or benefit from discounts and bursaries. She said 28% of students paid less than $4,000 a year and 68% paid less than $8,000.

College Board figures showed that grants to American students have been rising, but not as fast as tuition fees as the cost of higher education has been pushed on to students and their parents from the federal government and the states. Of the estimated total student aid of $105bn in 2002/03, 45% came from federal loans and slightly less than 20% from the universities themselves in the form of scholarships or fee discounts.

Average repayments for graduates were running at 9% (with a median figure of 6%), although higher debts were run-up by law and medical graduates, who expected higher earnings.

"Student borrowing is a reasonable means of finance for a portion of the cost of higher education. The level of public alarm surrounding the accumulation of debt in the range of $20,000 to $25,000 for current students is unwarranted for most students. However, there are clear warning signs relating to the most vulnerable groups of students and to rapid increases in the amount of debt students accumulate." These include students from poor families and those who failed to complete their degree courses.

The current low interest rates were significantly easing the burden of repayment, she added. In the UK graduates will pay no interest on student loans.

Dr Archer said fees made higher education "risky and a bad deal for many working class and ethnic minority learners". She argued they would reinforce the hierarchy of universities in the UK and channel students from poor families into the "crap, sad, grey concrete urban institutions".

She said: "We don't have horses for courses as the rhetoric of choice insists - we have completely different races going on....A few bursaries aren't going to address complex injustices. "

In response, Bruce Johnstone, of the State University of New York at Buffalo, said the cost to any government of rolling back private contributions to higher education, taking on the backlog of university maintenance and restoring generous grants for all would be huge. "The tax challenge for this is horrendous and most of it would make no difference to enrolments - I see this as absolutely impossible."