NUS National Women's Officer Olivia Bailey reports on the gender pay-inequality that will affect women's repayments of student loans.
Olivia Bailey is the National Union of Students (NUS) National Women’s Officer
Last weekthe Daily Mail published an article claiming “80% of women will not pay back their student loans”. The Mail’s seeming intention is to suggest women are being given a free ride by the new funding system. Whilst cherry-picking statistics to manufacture a story is nothing new, this headline got my attention.
Ignoring the journalist’s attempt to try and portray a lifetime of debt as an unfair advantage for women, the warning at its core is both deeply concerning and likely to be true – that women will take twice as long as men to pay back their loan under the new system, and that 70-80% of women, compared with 30-40% of men, will never earn enough to pay back their loan and face 30 years under a huge burden of debt.
These figures come from a submission by the London Economics consultancy to the Department for Business, Innovation and Skills (BIS) Select Committee review of higher education funding: 70-80 per cent of women, according to their figures, won’t be able to pay off their full loans in the 30-year period after they graduate.
The submission’s figures are likely to be broadly accurate but are based on the assumption that the value of the loan will never increase in real terms. Depending on the interaction of various measures of inflation this could well underestimate the amount that anyone, particularly middle-earners, will pay back over the 30 year period. So the reality may actually be much worse for women.
As well as the extraordinarily high level of debt that the government is imposing on graduates this report also highlights the true extent of the discrimination women face throughout their lifetimes. The gender pay gap still exists to an extent where women will have their loans hanging over their heads for twice as long as their male counterparts, and the vast majority will never earn enough to pay the loan back.
According to the figures in the submission, women in the top half of earners will be making loan payments for around 5-10 years longer than the equivalent men. An extra decade of 9 per cent of their pay cheque going to pay for an education they finished 20 years previously.
The average gender pay gap currently stands at 16%, and rises to 24% for black women. The pay gap is 55% for women working in the finance sector and 64% of low paid workers are women. Women students are leaving university to a promise of earning at least 16% less than their male classmates who have the same academic ability and potential as they do.
The new fees system means that now they will also be leaving to the promise of a lifetime of crippling debt – which half their male peers won’t have.
The NUS Women’s Campaign has been predicting for some time that both education cuts and higher fees will have a disproportionate effect on women. Even under the current system, House of Commons research shows that women take on average five years longer to pay back their loan.
The NUS Women’s Campaign has launched a Women Against Education Cuts campaign and we’ve organised a number of actions to highlight the issue, like our protest outside the office of Lynne Featherstone MP the day before the fees vote. This submission is the first of what I imagine will be many that will reveal that our fears are, sadly, well founded.
The London Economics submission was written to illustrate that despite David Willetts’s claims that the new fee loans repayment system is progressive, that it very much isn’t. The report shines a light on the harsh reality – that the coalition government’s cuts are targeted at those least able to afford them.
Figures from the House of Commons library found that 72 per cent of the cuts identified in last year’s emergency budget will come from women’s pockets.
The job losses in the public sector will hit women hardest as women make up 65 per cent of the public sector workforce and are concentrated in lower paid jobs which are the focus of the cuts. Cuts to things like the health in pregnancy grant, the Sure Start maternity grant and child benefit are ones that women rather than men disproportionately rely on.
The Fawcett Society have been very effectively making the case that the cuts risk rolling women’s fight for equality back a generation.
The Daily Mail appears to have been trying to demonstrate a ‘liberal’ bias towards women in the new higher education funding system but it actually reveals the reverse – that women bear the brunt of cuts to our public services and that this government is systematically cutting women out of education.
26 Responses to “Is the government cutting women out of education?”
Helen W
RT @leftfootfwd: Is the government cutting women out of education? http://bit.ly/i54N9w asks @nusuk Women's Officer @LivBailey
anyleftiwonder
Ha ! So the Daily Mail cocked up.
13eastie
The obvious solution is to borrow money faster and then make children of both sexes work to pay for their parents’ education.
cim
The thing is, there is basically no downside to not paying the loan off in full. It gets written off completely after 30 years. So the cost of your education is not the nominal value of the loan, but the cost of the repayments one actually makes. And on that measure, women will pay less on average. (And yes, the reason for that is the pay gap, which should be ended, but that’s not really relevant)
This, incidentally, would remain true if education was instead funded entirely through general taxation – women would earn less, so would pay less income tax (and be much less likely to pay higher rate income tax) and again would pay less towards their education.
“The new fees system means that now they will also be leaving to the promise of a lifetime of crippling debt – which half their male peers won’t have.”
9% over 21k is hardly excessive. Indeed, for low earners it’s better than the NUS’s own graduate tax proposal, while hitting high earners harder.
And bear in mind that a lot of the men will be finishing their repayments in the 25-30 year range: much higher repayments, over almost as long. It’s hardly as if they’re paying the whole lot back in just a few years and then benefiting from lower tax on the rest of their earnings. (You’d need annual earnings of well over 100k to repay a loan in 5 years, for instance, which is hardly a typical graduate starting salary, even for men)
There are a lot of things wrong with the education funding reforms – and certainly the cuts in general are very anti-women – but the loan repayment terms are incredibly generous. Considering student loan debt to be in any way equivalent to a real debt of the same value is absurd (if I could take out a new loan on the terms of these student loan to twice the value of my current debt, half of which would go to repay that debt, and the other half would be paid to the SLC as an admin cost, I’d do it straightaway … and so, I think, would everyone else)
Mr. Sensible
Olivia is any of this really surprising given what Mr Willets had to say last week…
On a serious point, quite apart from the impact this has on individual women, what on earth would an 80% female default rate do for the public finances? We read in the papers over the weekend that BIS is having to cope with increased costs as a result of more and more institutions charging £9000 (as predicted), and such a high default rate would only make matters worse. So, short of saving the taxpayer money, these changes to student finance are in fact costing both students and taxpayers.
And given the other cuts you refer to, I think one simply has to ask what on Earth ms Featherstone is actually doing?