The Money Stats are out today and figures reveal that the latest group of students from England to begin to pay off their loans owe more than ever before.
The average debt for the graduates who entered repayment this year was £24,640, up from £21,170 in 2015. Due to incremental rises to tuition fees and maintenance loans, the sum owed by students has risen steadily for the past decade, tripling since 2003. Much of this is driven by the introduction, and gradual rise of tuition fees.
The other, often overlooked, driver of rising student debt is the runaway cost of accommodation, which requires ever larger maintenance loans just to keep up. Original research from The Money Charity last year found median rents growing by £277 between 2014 and 2015.
To make matters worse, this is the last group of students to pay a maximum of £3,465 in tuition fees before the rise to £9,000. So the 2017 group will immediately owe £16,605 more than their predecessors, even before we take into account the rising maintenance loans.
This year’s graduates, who will begin to repay next year will face average debt levels of well in excess of £41,000 – 35% of the average outstanding mortgage (£117,162)!
Michelle Highman, Chief Executive of The Money Charity says:
“For nearly half the young people in the UK, becoming a student will be the first step into adult life, with all the financial responsibilities that brings. We worry that these early, formative experiences of debt will leave a lasting legacy.”
“Normalising large quantities of debt right at the start of people’s financial independence risks setting them up to fail. The size of these sums may also affect later borrowing such as loans and mortgages.”
Other key points from August’s Money Statistics include:
- The Government borrowed £260m a day during April 2016 (£3,009 per second).
- The population of the UK grew by an estimated 1,286 people a day between 2014 and 2015.
- Figures from DCLG show that in 2014/15, private renters spent an average of £775.67 a month on rental payments, while owner-occupiers paid £663 in mortgage payments.
- The number of people classed as unemployed between March to May was 1.646 million (5%). This is down by 54,000 from the previous three months, and down by 201,000 from a year earlier – 550 a day.