Professor Stiglitz gets into a tangle on student debt

Professor Joseph Stiglitz is a Nobel-prize winning economist who sits on the Scottish Government’s Council of Economic Advisers.

On 14 September 2014 Scotland on Sunday carried this piece in his name, which touched on student debt.  The same text turns out also to have been carried in The Sunday Herald  on the same date.  Professor Stiglitz commented that:

But the Scottish vision and values are different from those dominant south of the Border. Scotland has free university education for all; England has increased student fees, forcing students with parents of limited means to take out loans.

This appears to suggest that student loans are an English phenomenon and also that borrowing in England, to which Prof Stiglitz limits his comparisons, is particularly concentrated on those from poorer backgrounds, when of course it is Scotland alone in the UK which expects those from the poorest homes to borrow the most.

Scotland on Sunday kindly carried the response below from me in its 21 September edition.

PROFESSOR Joseph Stiglitz (Another Voice, 14 September) notes that “Scotland has free university education for all; England has been moving towards increasing student fees, ­forcing students with parents of limited means to take out loans”.

In coming to understand Scotland’s balance sheet as he has, Professor Stiglitz must surely have noticed that this year the Scottish Government is budgeting for Scottish students to take out almost £0.5 billion in student loans? If he has asked for information on who takes out most of this loan, he will know that it falls disproportionately on “stud­ents with parents of limited means”, and low-income mat­ure students, because we make such little use of student grants.

Professor Stiglitz compares Scotland with England. However, Scotland is the only part of the UK where student debt falls most heavily on the poorest. In Wales, indeed, an exceptionally generous system of student grants both for living costs and fees means that many Welsh students “of limited means” are able to leave university with less debt than equivalent Scots.

As an economist, Professor Stiglitz must see that it is profoundly regressive over the long term to run a system under which those who started with the least will end up paying back the most. The greatest service he could do Scottish students from the poorest backgrounds is not to repeat the government rhetoric here, but to use his influence with ministers to challenge it.