I took out a student loan 13 years ago in 1995. I remember taking out the maximum possible loan, which in those days was about £3,800 over 3 years. Being an economist, I didn’t spend any of the loan but put it in a bank account and benefit from receiving a higher interest rate than that charged by the government (interest rate was equivalent to inflation rate).
For 4 years after graduating University, I never had to pay any money back because my salary was below the minimum amount. The student came in very useful when I bought a house and I was able to use the £4,000 as part of the deposit.
For the past couple of years, I have been paying back the student loan at about £65 a month. I’m glad to have finally have paid it off and I’m also glad I took it out. Cheap finance can always come in handy. I think debt is not necessarily bad. What is bad is taking out debt with very high interest rates.
Finance for studying at University is an example of market failure. Going to university is likely to increase your average earnings (unless you work as a part time teacher like me) However, it is difficult to finance 3-4 years because no bank is going to lend such a high amount without any collateral. Therefore it is necessary for the government to intervene in the market and offer affordable loans.
The problem is that these days, the budget for students has been squeezed by increasing numbers going to university. The effect is that students need to borrow more than ever before.
Personally, I dispute the need to send 50% of students to university. I would rather see people encouraged to vocational qualifications rather than just churn out endless numbers of sociology degrees e.t.c.