When is a loan not a loan? When it's the smoke and mirrors of the Liberal Democrats

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One of the problems of the last decade has been so many of us borrowing money on the never never.  Now we have a generation of students being forced to take out enormous loans for university, and the government trying to tell us that it's nothing to worry about.

So my eldest daughter may need to borrow £27k just for her degree fees.  That's a real loan, a real debt, under her name that will stay with her the rest of her life until it is repaid.  And the government loan scheme she will be forced to use will attract commercial interest, and if she repays that loan early she will have to pay a penalty.

So the total loan and debt is closer to £44K, a calculation the leader of the Liberal Democrats Nick Clegg has made himself.

Now for the smoke and mirrors...listen to this radio clip from Sir Paddy Ashdown, trying to pretend there is nothing to worry about and almost nothing to repay.

I've looked at the figures, and if my daughter earns above £21k, she will be paying 9% of all that income above £21K to the government.  Now the average salary in the UK for full time workers is £31K.  So if my daughter ever earns the average salary, she will be paying 9% of 10K back to the government.  

So never mind how paying 9% of 1/3rd of her salary in loan repayments will affect her, she is still going to have to pay £44K!  So before tax my daughter is going to need to earn closer to £67K just to repay this loan.  A whole generation of students paying 9% of 1/3rd of their income on average to loans and debt, but it's nothing to worry about!

With this logic, how far with things go?  I can hear it now when my son gets to university and fees and interest are £60K, needing to earn £90k just to repay that and he'll still be told that it's not a real loan and there is nothing to worry about.

Given the governments other banal justification for these fees, of reducing a degree to a tool to increase your earnings potential in your lifetime by £100K, no wonder my kids are thinking why bother?  And why bother to get a well paying job when 9% of anything you earn above £21K will go in loan payments.

And what if my kids want to do a pos-graduate degree?  They are likely to have students loans that are the size of a mortgage for a house purchase.  But hey it's nothing to worry about.