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Monday, November 24, 2008

Fighting Student debt

The news is dominated by Gordon Brown's proposed tax package this morning and in particular the prospect of deferred tax rises for those earning more than £150,000.

If, as suggested the Government's tax cuts focus on reducing the rate of VAT then I will be disappointed. VAT is not imposed on basics such as food and clothes so it is likely that those struggling to make ends meet on or below the poverty line will not benefit from this cut. There are also questions as to whether all of the reduction will be passed onto shoppers.

It seems to me that a straight income tax cut or the raising of income tax allowances would have a bigger impact on consumer spending, whilst helping those who are worst off.

I wanted to concentrate however on another announcement taking place tomorrow in the Welsh Assembly. At some time tomorrow afternoon the Education Minister will get to her feet and outline the Welsh Government's conclusions on the funding of higher education. It is likely that this will include her approach to student debt and to tuition fees and, although we can guess, nobody yet knows what she might say.

With this in mind I was intriqued by two articles in the newspaper of Swansea University Students' Union, Waterfront. The first describes how NUS representatives, including president Ben Gray, invited students to write their debt on a sticky note and post it on one of two pin-up walls. Almost £3m-worth of debt was on display from just one per cent of the student population.

That is a huge problem and one that some will seek to exploit. Hence the second article that students at the same university have been targeted by an escort agency:

Posters were put up in the campus and surrounding areas appealing for students to call a number given on the poster for more details. The Waterfront posed as an interested student. When asked whether escorts were expected to have sex with customers the answer was: “Yes, sometimes.”

The man who answered the phone went on to say: “Sometimes you get the ones who want personal services.“ If you’re not interested in that it’s fine, but the money is better. The money comes in then if you offer ‘professional’ services but the money is still good if you just go out for dinner.”

He went on to explain why the company is targeting students and appealed for us to get others involved. “Students might be interested because they might not be from round here, they won’t have any ties,” he said. “If you have any friends who might be interested, male or female, let me know.”

Potential escorts were expected to pay £10 a month or £40 for the year, for the agency to advertise their services on their website, which we were told will be launched in a fortnight, as well as in the local press.

The Students’ Union has warned students they could be putting their safety in danger if they engage in escorting.

The Welsh Assembly Government do not have the resources to make any sort of impact on the sort of debt illustrated by Waterfront nor can they provide the level of grant support that will mean that students are not tempted by the money made available from working as an escort, but they can make things easier if they get the financial package right. My fear is that tomorrow's statement will involve a scaling back of support for students. We will see.
The debt situation is going to get better. With the recent bailout, it has opened more doors for the consumer. I think that we will see a strong turn around in 2009.

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