Today's shocking figures show over a million unemployed young people, that's 1 in 5. The two graphs above show how a spike in the birth rate 20 years ago has combined with a recession and rising unemployment to produce increased demand for university places despite the impact of tuition fees and the burden of paying back loans. A BIS research paper on the impact of university finance on participation rates, published in September 2010, concluded that a £1,000 upfront increase in tuition fees reduces participation in HE by 4.4% whereas a £1,000 increase in loans increases participation by 3.2%. The effects would not be evenly spread across socio-economic groups. In 1960 5% of the young population went to university. By 2001 it was 35% and today it's 42%. The research cannot of course predict the effect of the newest tuition fees on participation but if it continues to grow, the debt problem will not just be a personal one for students. An economy in which so many people start their working lives with nearly £30,000 debt (actually more taking into account maintenance) will be severely unbalanced. The savings ratio will fall. Of course if many of those people can't find jobs, then the debt will remain part of the government's problem instead.
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