A Life of Debt Slavery

As I mentioned in my recent post Financial Literacy in UK Schools, I wanted to take the opportunity to revisit a couple of topics which are very important to me as the UK general election draws closer; topics which I feel should be important to everyone of voting age, because they concern the way our children are educated and what kind of life we’re setting them up for in the future.

This video discusses the cost of a UK university education and the disastrous “50% in further education” policy introduced by the Labour government under Tony Blair.

With the exception of the UK Independence Party (who have stated that they will scrap university tuition fees for Maths, Science, Technology and Engineering degree courses), none of the political parties seem to be discussing the cost of further education, and my own opinion – for what it’s worth – is that we are selling our younger generation down the river by persuading them that further education is the no-brainer “next step” after A-levels (no matter what soft-option degree course is on offer) and that the graduation certificate is all that matters, thereby funneling them into a lifetime of debt slavery.

Student Debt, A Ticking Timebomb?

With the United States and the UK home to some of the most expensive universities in the world, the average Millennial now exits further education with a student loan debt sentence of 30 years to life.

Studying abroad is an option of course, but only if you’re fluent in a second language and if you have very deep pockets: foreign students tend to pay more for their education abroad than home students, most everywhere in the world.

Until now…

In direct contrast to the UK’s tripling of university tuition fees, Germany has abolished tuition fees entirely.

But not just for German students: tuition fees have been abolished for everyone studying at a German university now, so no matter where in the world you come from, you can apply for a free education at a prestigious university in one of the most technologically-advanced countries in the world: you don’t even need to learn German to study there because many of the university courses are offered in English (although you’ll be near-native fluent by the end of your 3-4 year degree course).

Soft-Option Degree Courses

You want more? Well, unlike the US and the UK, Germany has NOT been moving mountains to push 50% of its school-leavers into university education (regardless of their ability or job prospects at the other end) and as a result there are likely to be few soft-option degree courses such as Advanced Knitting and 16th Century French Poetry.

Why is that good? Well, it will mean the people who go to university are the ones who should be going to university: the ones who are studying to become future engineers, doctors and scientists.

I am not saying that studying for the sake of studying isn’t a good thing… if you have all the time in the world to play with and an unlimited supply of cash, knock yourself out. However, please understand that you are one of the tiny fraction of students who don’t need to worry about getting a job at the other end: the rest of us need to leave further education with skills and even some relevant experience if we hope to compete in the jobs market.

Free Education?

But back to Germany: with a free education now on offer, you would expect there to be a surge of foreign-student applications for college places in Heidelberg, Munich and Berlin, wouldn’t you?

What are those crazy Germans thinking? How will they afford it? And what could they possibly stand to gain?

I am glad you asked…

I suspect that, similar to the way Australia is very particular about who they allow into the country based on the skills they possess, Germany will be able to choose from a very, very long list of able applicants and they will be choosing only the brightest and the best.

And why not? That’s the way university applications used to work. There were a limited number of places and only the very best were offered a place.

But what I find really interesting is that while the UK and the US are busy ramping up their tuition fees, Germany is heading in the opposite direction: not satisfied with trebling tuition fees in 2012, the UK is aiming to increase them again from next year (possibly by a further eye-watering 65%) while Germany sets its fees at zero for all.

Further education in the UK and the US has now become a commodity, to be sold at the highest price possible via some slick marketing and a never-ending loan. By contrast, Germany clearly sees education as an investment.

How so?

Well, as a bright, ambitious student, given the choice between

  1. studying at a red-brick university in the UK and starting your working life with a £60,000 student loan debt around your neck, or
  2. studying at an elite German university and leaving with your engineering / medical / law degree and NO debt

which would you choose?

Still not seeing the investment potential?

Okay, what happens when high-schoolers leave home for the first time and go to university? They make new friends… they grow up… and they find a place where they belong. Or at least where they feel they belong (which is essentially the same thing).

So will these students complete their 4-year degree course and jump on the first place back home to Warrington or Wisconsin? Or will our newly-graduated elite have established relationships during their time at university? Will they have picked up the language during their time abroad and learned to enjoy the freedom of a European lifestyle? And being the bright, talented young things that they are, what are the chances that they will have been scouted by a top German firm and offered a well-paid job with advancement opportunities at the end of their course?

Now do you see it?

Investing In The Future

Germany is very cleverly taking advantage of the UK’s hideous “50% in further education” policy and the US’s over-priced “college experience” by offering a free education to the most gifted, adventurous and savvy students from around the world, knowing that a large proportion of them will not leave at the end of their studies, and knowing that they will find work and raise a family where they have – to all intents and purposes – grown up.

Despite the current woes in Europe, Germany is investing in its future. And when the euro experiment finally comes to an end, either due to the collapse of the currency or to a systemic collapse of the banking system, it will be the German economy which emerges from the ashes first, strong, powerful and well-educated.

Myles Money

Myles writes about money management, debt control, student loans and financial literacy for teens, 20s and beyond. He is also a regular contributor to RealVision TV, where he discusses economic and money-related issues affecting the millennial generation.

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