Record graduate debt due to rising tuition fees and maintenance costs

2016’s university graduates owe more in student loans than in any previous year on record, new research suggests.

According to financial advisers The Money Charity, new graduates who started to repay their university loan this year owed £24,640 on average, up from £21,170 in 2015. That’s an increase of 15.5 per cent or £3,470 in just 12 months.

This is believed to be down to a rise in tuition fees, which can be anything up to £9,000 a year, as well as rising maintenance and rent costs.

However, these figures refer to the last group of students to study with the £3,465 cap in place. 2017’s figures will include the first students to pay the £9,000 annual tuition fees, introduced in 2012.

This means next year’s student will automatically owe £16,605 more than 2016’s, even before the rise in maintenance loans is taken into account.

This year’s graduates, who will begin to repay next year, will face average debt levels in excess of £41,000 – more than a third of the average outstanding mortgage (£117,162).

Snowballing 

Research published by The Money Charity last year showed that accommodation costs are snowballing, with average rent growing by £277 between 2014 and 2015 for students living outside of London, far outstripping the average rise in maintenance of £121.

Separate research from Aviva found that more than a third of students regret going to university due to how debt it leaves them with. 

Michelle Highman, CEO of The Money Charity, said that this kind of heavy debt could have traumatising repercussions in later adult life.

“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,” she commented.

“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.”