Loan News

Student loans – £21.9 billion and counting

25 June 2008

Across England, 2.7 million people owe money to the Student Loans Company. At the end of the 2007-08 financial year, they owed almost 22 billion pounds between them – on average, over £8,000 each.

In theory, a higher education is an advantage in the job market, giving people access to higher-paying jobs, making all the debt worthwhile. But it doesn’t always work out that way in practice, and it’s a lot less tempting when student loans mean the average graduate debt is measured in tens of thousands of pounds – and growing.

A poor start?
‘Starting out’ is never easy. From laying down a deposit to buying all the necessary pots, pans and bed sheets, leaving home is an expensive time. To make ends meet, many people are tempted to borrow a little, then a little more – until they’ve picked up a debt that’ll take them years to pay back.

When people leave higher education, there’s a real danger they’ll find it more tempting than most. A £3,000 personal loan probably doesn’t sound like much to someone who owes £20,000 in student loans by the time they’re 23.

Then there are graduates who feel held back by their student loans. Even though they won’t have to start repaying their student loans until they’re earning at least £15,000 a year, that debt is still there, hanging above them. Until they’ve repaid a fair bit of it, they might not want to borrow at all. This could put them off buying the car that would get them to work, or taking out the mortgage that would get them on the property ladder.

A poor future?
Most graduates would agree that their education was worthwhile (and, many people say, it’s only fair that they contribute to it themselves) but they’re not the only ones benefiting from it. After all, it’s good for the whole country when higher education is a possibility for everyone, not just people who can afford it – or are prepared to spend many years paying for it. It’s good for the economy, and it’s a good way to encourage children from all backgrounds to study harder at school.

So it’s particularly worrying to see the cost growing at such a rate, potentially putting more and more people off the idea of studying. In 2007-08, higher education students borrowed a total of £3.9 billion in student loans – 32.2% more than the year before.

And some professionals, like doctors, have to study much longer than other students, which means more student loans and higher overall debt. According to the British Medical Association (BMA), medical students have been graduating with debts of £20,000+ for years, and today’s ‘average’ medical student could owe the Student Loans Company over £37,000 by the time they start work – or over £46,000 if they studied in London.