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Graduates in a debt trap

Spain´s youth can´t pay back loans

This year, the 2,235 graduate and PhD students who took out a loan from the Education Ministry for the 2010-2011 semesters will have to start paying back around 300 euros a month.

In a country with nearly six million unemployed, finding a job is almost a miracle, and that´s despite the fact that these university students long ago gave up on finding work in line with their level of education. That is why they have created the Platform for Victims of University Loans, a support group that is aiming to draw attention to their desperate plight.

The students say that they want to pay back their loans, but that in the current "state of emergency" they want a moratorium until the crisis lets up, or else they want the same loan conditions granted in previous years. When this program began in 2007, the conditions were that loan repayments would start after three years – or when borrowers earned more than 22,000 euros a year – with no interest and over a 15-year period. After that, if their income was still too low, the debt would be canceled out. The state was the guarantor.

For the 2010-2011 academic year the clauses became tougher. Loans for a one-year master´s degree would have to be returned starting two years after graduation (or three years in the case of a two-year degree). Borrowers only had four years to return the loan, which was a maximum of 15,600 euros for a one-year course and 28,000 euros for two years. Then, suddenly, during the last academic year, the Popular Party government eliminated the loan program altogether.

Everyone who was interviewed for this story said the same thing: "We were told that it was essential to get training in order to find a job, but now we are out of work and laden with debt."

The ministry says that it is aware of the problem and that it is committed to finding a solution, although it cannot provide figures on the number of loan defaults. A spokesperson drew attention to the complexity of an issue that involves so many factors: the ministry itself, which put forward the money; the ICO, a government credit agency; the banks, which acted as middlemen; and finally, the 2,235 borrowers.

Sources at the ICO say that they will follow the guidelines set by the ministry.

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