The true cost of education – How traditional student loans are hurting the digital economy – FE News

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As the world around us becomes more and more digital, it is becoming increasingly clear that the future of our economy lies in technology.

According to LinkedIn research, 150 million new tech jobs will be created over the next five years. The catch, however, is that 40% of the UK workforce lack the digital skills needed to fill these roles.

Although many people want to pursue a career in technology, some may not have a deep understanding of how to achieve their goals. Instead, they end up with a degree that doesn’t adequately prepare them for work in their chosen field and thousands of pounds in debt.

Although the government provides student loans to many people – currently nearly £20 billion is lent to around 1.5 million students each year – it fails to provide clear and sound advice to students on most appropriate tech courses to achieve their career aspirations, and because people are focusing on tech fields that don’t match their career aspirations, the digital skills gap continues to widen.

Where the private sector is doing badly

Many students turn to the private student loan industry because it can give them access to more flexible loans and allow them to borrow larger amounts. In this sense, the objective of the private sector is to offer a viable alternative to public loans which, in addition to being granted in a uniform, almost arbitrary way, are costly, complex and rigid.

Rather than being a gateway for students looking for a more affordable loan to finance their studies, the traditional private sector acts as another barrier for borrowers, given the exorbitant interest rates at which s are waiting for many suppliers. that they pay.

This means that many people are blocked from accessing the further education they need to get jobs in tech, but still end up with large sums of money to pay back.

It is therefore clear that another approach is needed, whereby students not only benefit from fairer and more affordable access to funding, but also receive valuable and clear advice on the courses in which they should enroll in order to acquire the skills and training needed to get into the technology.

Why challengers to traditional models are needed

A new type of loan provider offers a solution that puts students’ interests first. By leveraging real data, challengers guide students through the process of selecting a course that matches their goals in the tech industry. A student’s career aspirations and existing skills are studied in depth to determine which courses are right for them, and courses that are likely to be a waste of time and money can also be identified.

With no hidden fees or interest rates to pay, students then work closely with providers to agree a repayment plan that suits them and will be within their means. In this sense, learners can have greater peace of mind that they are not only pursuing continuing education that will help them achieve their career goals, but that they will also not be impacted by fees. unexpected or costly extras.

Additionally, since taking a more transparent and hands-on approach to guiding students through the process of accessing funding means that loan providers are more likely to recoup their investment, this model is just as in the interest of lenders that it is. among borrowers.

People should be encouraged to continue their studies in the field of technology

While spending on traditional government and private sector loans deters people from continuing their education in technology, the emergence of challengers to traditional models provides the incentives and confidence people need to pursue the skills and training needed to work in the industry. .

With technology constantly changing, it is of paramount importance to the continued prosperity of the UK economy that people’s skills evolve alongside it. There is no denying that the country faces uncertain days and that technology and those with the digital skills to harness it will have a key role to play in driving our economic growth. Right now, however, government and private sector loans are only hurting the economy, and students aren’t getting enough guidance on how to achieve their career goals.

Only by making funding and guidance on continuing education more accessible will the nation’s digital skills gaps begin to be closed.

By Brett Shanley, Founder and CEO of Knoma

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