Students clock up debts averaging almost £8,000

Citation

(2006), "Students clock up debts averaging almost £8,000", Education + Training, Vol. 48 No. 7. https://doi.org/10.1108/et.2006.00448gab.002

Students clock up debts averaging almost £8,000

Students in England expect, on average, to have debts of almost £8,000 on graduation, according to a report by the Institute for Employment Studies and the National Centre for Social Research. The study, published by the Department for Education and Skills (DfES), involved interviews with almost 4,000 full-time and part-time students in England and Wales. It reveals that:

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  Total income for full-time students in England averaged £8,300 over the academic year 2004-2005. Average spending was around £10,250. Student income, expenditure and debt were all substantially higher than when they were last comprehensively surveyed in 1998-1999.

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  The cost of being a student has risen, partly because of increased tuition fees and other participation costs and, to a lesser extent, because of increased housing costs.

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  However, incomes appear to have risen faster than costs, as more students borrow money from student loans and engage in term-time employment. Most full-time students now have some form of employment during the academic year and 40 per cent maintain a regular job. The research shows that working students earn an average of £3,200 after tax, excluding any summer-vacation earnings. Meanwhile, parents are contributing relatively less.

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  The growth of student loans has contributed to higher levels of student debt. Among final-year students from England, the average predicted debt by the end of the course is around £7,900, although levels of debt and students’ concerns about them vary considerably. For example, loans are higher for medical students, related to the fact that they have lower-than-average earnings from paid work. However, medical students are the least worried about student debt. This may be because their future earnings are above average expectations.

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  Financial experiences of students vary considerably according to their personal characteristics – for example, age, family type, ethnicity or other circumstances such as whether they are studying full-time or part-time, and location.

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  Despite higher costs and debt levels, only around one in eight students felt they had a lot less money than they needed. Eight out of ten students felt that the long-term benefits of higher education were greater than the costs and that they would earn more as a result of going to university.

Meanwhile, the Government has outlined plans to ensure that student loans are repaid by borrowers who move abroad after completing their courses. All students will have to enter a contract with the Student Loans Company (SLC) on entering university, which commits them to repaying the loans on completion of their courses. The contract also allows the SLC to enforce collection of the loans.