Jiva Technology

Your student loan: is it a debt, is it a tax?

Here’s a thing: the dictionary definition of a loan is simple, “a thing that is borrowed, especially a sum of money that is expected to be paid back with interest”. So far, so straightforward. On that basis, a student loan is money that you borrow to pay for your studies and associated living expenses and then pay back once you enter the world of work. Plus of course the interest, which is currently running at an eye popping 6.1 per cent.

But hand on a minute, why does every self-respecting personal finance commentator and newspapers ranging from the Financial Times to the Guardian suggest that your student loan isn’t actually a loan? Simple, because most people are not expected to pay it back. Current IFS estimates are that 83% of graduates won’t repay. And if 83 in 100 people who take out a loan don’t pay it back, then its no longer a loan in any real sense of the word.

Does any of this matter? Who cares if only a few people pay back the money? Well it does matter and it matters for a few important reasons that no one seems to be talking about. Student debt has already ballooned to over £100bn and sooner or later someone has to pick up the tab. Politicians have engaged in a classic classic fudge where they tell one group of people one thing (its a loan, we’ll get the money back) and another group of people another (don’t worry, you probably won’t have to pay). The money has already been spent on those shiny new campus building and extravagant Vice Chancellor salaries, so what happens when student debt becomes a problem for the Government or taxpayers who don’t go to university realise they’re picking up the tab anyway.

What’s more, why are we telling people to take out debt and then not worry about repaying it? It sounds like the definition of a bad habit to get into. Student debt appears to be yet another topic that we cannot have an honest public debate. This won’t go away if we don’t think about it, it just gets worse. There are only two solutions: most of the debt is picked up by taxpayers or most of the debt is picked up by students. What I fear more than anything is that the rules will change – we’ll start telling students its okay and they won’t have to pay and then switch as the debt mountain becomes too high. That, more than anything, would be the epitome of unfairness.

David v Goliath

Its hard to avoid the excitement surrounding Bristol City at the moment. I may hail from the blue side of town and have always been more interested in the fortunes of Bristol Rugby over Bristol City and Bristol Rovers, but tomorrow sees a big day for “The City”. The local team take on the giants of Manchester City, having already engaged in the David-like downing of Manchester United. Lets hope they do themselves proud. Manchester City have already endeared themselves by extending a VIP invite to Bristol City ball boy and viral social media sensation Jaden Neale. His celebrations on the touchline with Bristol City manager Lee Johnson will no doubt earn him an honourable mention on next years SPOTY. You can only imagine the tales he’ll be telling classmates when he gets back from meeting Pep Guardiola and the boys. He’ll be dining out on it for years. Its amazing how sport can energise a city and with table-topping Bristol Rugby unbeaten (and playing like a rugby version of Brazil to boot), it looks as though the Damp Dip (as we like to call it) might be about to punch its weight in sporting terms at long last. So here’s to Bristol City as they take on a team that cost more than every single Bristol City team in history. Enjoy yourselves and do us proud.

As the year draws to a close

The end of any year provides ample opportunity to pause and reflect on what has come before and this year is no different. With the significant political turbulence we’ve seen in 2016 and 2017, one thing seems very, very clear: things will not be going back to the way they were. One consequence of the political earthquakes of the past 18 months seems to be receiving little attention, but could ultimately have a significant impact. With governments tied up with Brexit in the UK and ‘meeting the expectations of the political base’ in the US, pretty much any other ‘business as usual’ government activity has gone out of the window. If I could sum it up in a few words, it would be: ‘you’re on our own’.

Whether you’re still in education, just starting out or in the full flow of a career, I would be paying very close attention to the skills that are in demand and the skills that will be in demand in the future, because you shouldn’t expect a general rise in the economy to help you out. Its time to have a strategy and time to back that up by investing in the most important productive asset you have: you. It seems pretty clear to me that government is behind the curve on providing an education that meets the needs of the jobs market; you can see it in the productivity figures, you can see it in immigration figures and you can see it in the big skews between in-demand jobs and those where there’s an over supply. You could argue that its not the job of the education system to direct resources to where they’re most needed, but with the incredible fragmentation of jobs and careers over the past twenty years, its tough for school or university leavers to get a good grip on which way they should go.

I think there’s a place for advice from educational institutions and government, but if you’re in education or at the start of your career, its worth recognising the reality that increasingly the onus falls on you to think about this. A lot of people limit their thinking to what their parents did or close relations. Some fall into jobs by accident. But we have to accept that the world just got a whole lot more volatile and unpredictable, exactly at the time when politicians are focused on other things. You can complain about it or you can sit down and have a good hard think. We all know what will be important in twenty or fifty years time. Will you have the skills to fit in? Its the end of the year … a good time to think about it.

Is the UK Chancellor a Jiva Blog Reader?

Who knew that the UK Chancellor was such an avid reader of the Jiva blog? A matter of days after publishing a blog post reiterating the importance of maths, Chancellor Philip Hammond stands up in the UK Parliament and tells the country, “maths matters”. Whats more, Mr Hammond has backed up his words with cash. Schools get an £600 for every  pupil who sits A Level maths and teachers in certain areas will get an extra £1,000 towards professional development. Its all good stuff and naturally, the folks at Jiva will claim the credit for the government’s actions. Now all we need to see is a bit more action further down the school years, at primary level. If we’re going to have more people capable of passing maths A level, we need more encouragement in the early years. Its unlikely that a 16 yo who’s had little encouragement to enjoy Maths is suddenly going to be enthused when the school suggests it for A level. But thats a conversation for another day, lets be thankful for small mercies.

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