Julian Knight: The next debt-laden generation can forget about owning their own homes

Students will graduate owing colossal amounts of money, which they will be paying off well into their thirties

Twenty-seven thousand pounds for a three-year university course; well done, Nick Clegg et al; Britain's public universities are among the most expensive in the world.

And you can bet that when the new cap on fees comes in, all universities will miraculously rise to the new higher charge rate, whether it is Oxford, Cambridge or Middlesex. Fees of £9,000 a year will be the norm. Mediocrity in the university sector will be rewarded as never before and people from a similar background to mine – working class and lone parent – will be asking whether or not they dare to take the risk of university. Whereas for me at age 18 – sad to say a whole two decades ago now, with the grey hair to prove it – university represented a way out and up; now it's a route to years of indebtedness.

And, yes, I do know that the Lib Dems say they have secured a better deal for people from low income households, but how long will it last? The record of successive governments over university funding has been gradually to shift the cost on to students, promise some relief to the hard-up but then erode this help once the dust has settled.

But beyond the arguments of the rights and wrongs, I wonder how much thought has been given to the impact of loading so much debt on to people post-university. The approach seems to be pretty sanguine and the hoary old figure that graduates earn the best part of quarter of a million more than non-graduates over their careers is trotted out by this and the last government. Sure, college debt is part of the furniture in the US and, like there, I expect the birth of the fully fledged college fund to come into play, particularly now we are set to have junior individual savings accounts. But this isn't the US; despite the recession, per head of population, they are some 30 to 40 per cent wealthier than we are. What's more, look at the earnings of everyone outside of the underclass in the US and the income gap between us and them is even wider. The US has a more dynamic economy than the UK's, capable of substantial wealth creation. In short, I'd much rather be an American graduate with 80 grand's worth of debt than a British one with 40.

As for the idea that graduates earn so much more, yes, sure for my generation that's true in part – and that is what the Government's figures are based on – but for this generation I seriously doubt it. There are just so many graduates that there aren't enough decent paid jobs to go round. The £21,000-a-year earnings figure when student debt repayment will kick in is very deliberate as it's just below the national average salary. In a few years' time, you will find tens if not hundreds of thousands of graduates earning just over this amount making their debt repayments – equivalent to 9 per cent of salary – and as a result being far worse off than non-graduates.

Then there is home ownership. OK, I don't buy into the "you must own your own home to be a full part of society" malarkey; however, the past 30 years of property boom and bust have made millions richer than they could ever have realistically hoped to be. Without the bank of mum and dad, how can someone saddled with this scale of tuition debt ever afford to buy?

Spotting this last-minute iceberg on the day of the tuition fee debate, Vince Cable got a written assurance from the Council of Mortgage Lenders that saddling millions with tens of thousands of debt won't make a blind bit of difference to their lending decisions. The return letter from the CML is a masterclass in obfuscation; Cable gets his assurance at the start of the letter, but at the end the CML suggests that it probably will make a difference after all. I can't blame it; the same Vince Cable has been chiding it over responsible lending but then wants lenders to ignore a whopping great big debt. Sure, at present tuition fees aren't included in an individual's credit rating but that is semantics. Because repayments come out of salary at source, this automatically reduces the amount someone is able to borrow – as it should.

What's more, because debts will be bigger in future, it means they will last longer, so this hamstringing of people's ability to buy a property will carry on into their thirties and perhaps even their forties. That's just one of the realities of the new lifetime of debt which is now being brought about.

Iceland doesn't deserve the praise it's been getting for sorting out its mess

When the financial crisis was in full swing there used to be a joke going around. What's the difference between Iceland and Ireland? Answer: One letter and about six months. Commentators on Ireland's travails keep citing the example of Iceland as a country sorting out its mess in double quick time. It's true that economic growth has turned around in Iceland. The Icelandic government's budget deficit is proportionally half of the UK's and it will soon be in surplus. Exports are doing well off the back of a devalued currency. The theory goes that Ireland should take the opiate of inflation and currency devaluation, leaving the euro as a consequence.

Iceland's President, Olafur Grimsson, said that the key decision was to allow the banks to fail. "These were private banks and we didn't pump money into them in order to keep them going; the state should not shoulder the responsibility." What Mr Grimsson didn't say is that it was foreigners – largely the Dutch and us – who were left with the debt when his country let the banks fail. I think of Iceland like an individual who maxed out their credit, signed their home over to their spouse and rushed down to the bankruptcy court. Although the lenders were foolhardy, there is a moral responsibility to pay back what you owe, if you're an individual or a country.

If it wasn't for the fact that Iceland is an insignificant country with a population smaller than Hull, it would not have been allowed to get away with what it has. And it is more than a little galling to hear the International Monetary Fund praise Iceland for keeping its Nordic social welfare model alive when we are currently cutting our quite limited welfare state. Get this, for instance: in Iceland, if you lose your job, you will receive virtually full pay from the state for the first six months.

Instead of pointing to Iceland as the way to go, commentators should be supporting the Irish for trying to do the decent, honourable thing. They have been a serious player and want to be so again. Let's hope in the long run their more painful approach will be rewarded. There is a hell of lot more difference between Ireland and Iceland now.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Jeremy Paxman has admitted he is a 'one-nation Tory' and complained that Newsnight is made by idealistic '13-year-olds' who foolishly think they can 'change the world'.
peopleThe idea has been greeted enthusiastically by the party's MPs
News
Michael Buerk in the I'm A Celebrity jungle 2014
people
Voices
File: David Cameron offers a toast during a State Dinner in his honour March 14, 2012
voicesAnd nobody from Ukip said babies born to migrants should be classed as migrants, says Nigel Farage
Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
filmJames Cameron is excited
PROMOTED VIDEO
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
Arts and Entertainment
Stella Gibson is getting closer to catching her killer
tvReview: It's gripping edge-of-the-seat drama, so a curveball can be forgiven at such a late stage
News
Brazilian football legend Pele pictured in 2011
peopleFans had feared the worst when it was announced the Brazil legand was in a 'special care' unit
News
i100(More than you think)
Sport
Brendan Rodgers seems more stressed than ever before as Liverpool manager
FOOTBALLI like Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
News
The Magna Carta
archaeologyContemporary account of historic signing discovered
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
Sport
Benjamin Stambouli celebrates his goal for Tottenham last night
FOOTBALL
Life and Style
Dishing it out: the head chef in ‘Ratatouille’
food + drinkShould UK restaurants follow suit?
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Argyll Scott International: Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Argyll Scott International: 2x Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Recruitment Genius: Senior Execution Trader

    £30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

    Citifocus Ltd: ACA - Financial Reporting

    £Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

    Day In a Page

    Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

    Christmas Appeal

    Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
    Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

    Is it always right to try to prolong life?

    Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

    What does it take for women to get to the top?

    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
    Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

    Knitting pretty: British Christmas Jumpers

    Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
    French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

    French chefs campaign against bullying

    A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
    Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

    Just what you need on a New Year hangover...

    Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
    Cuba set to stage its first US musical in 50 years

    Cuba to stage first US musical in 50 years

    Claire Allfree finds out if the new production of Rent will hit the right note in Havana
    Christmas 2014: 10 best educational toys

    Learn and play: 10 best educational toys

    Of course you want them to have fun, but even better if they can learn at the same time
    Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

    Paul Scholes column

    I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
    Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

    Lewis Moody: Lancaster has made all the right calls – now England must deliver

    So what must the red-rose do differently? They have to take the points on offer 
    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game