The government says it can no longer afford the system: for every £100 a student borrows to defer the payment of tuition fees until after graduation, the government pays about £35.
If a student borrows $25,000 and (due to pluck and luck) earns enough that she has paid back the principal plus interest after just ten years, she will stop paying into the program," she said.
SafeStart, owned by a company called BridgeSpan Financial, charges $40 to $70 for every $1,000 a student borrows.
It is all very well to give the example of a student borrowing to gain a degree at the start of a career, but if that borrowing is then followed by more borrowing to improve other aspects of the situation, and then more borrowing, never ceasing, then you begin to detect the limits of such a policy.
The figures, by leading accountants, show that a student borrowing £39,000 for a three-year course could pay back up to £83,000 in total, in cash terms.
In reaction to reports that an elementary school student borrowed the book from the school's library, Walter Jones, a Republican congressman from North Carolina, proposed in 2005 the Parental Empowerment Act, which would require states to establish review boards composed of parents who would recommend books they deemed appropriate for public schools to carry in their classrooms and libraries.
Like last year, when Obama's initiative only tackled borrowing costs for a small segment of students, three-fourths of new student borrowing this fiscal year -- a projected $79 billion -- won't be affected.
Worse, according to a study by The College Board, students borrowed an average of $22,700 in 2007.
Universities that charge more than £6,000 a year would lose a proportion of the fee to help cover the cost of student borrowing.
To pay for a four-year college -- which costs approximately $42,224 at a private college and $21,447 at a public one -- students borrowed over $117 billion last year alone in federal loans.
