Thu. Jul 18th, 2024

Alarming Rise in UK Student Debt: Over 1.8 Million Owe More Than £50,000

Data obtained by BBC News reveals a concerning trend in UK student debt, with nearly 1.8 million people now owing at least £50,000. More than 61,000 individuals have balances exceeding £100,000, and around 50 people each owe upwards of £200,000, according to figures from the Student Loans Company (SLC).

These statistics were released following a Freedom of Information (FOI) request that sought to highlight the number of loan holders with above-average debts who are eligible to start repayments. Previously, the SLC had indicated that the average balance for loan holders in England at the time they began making repayments was less than £45,000. However, new government data shows this figure has now increased to £48,470.

Growing Debt and Rising Interest Rates

Student loan balances can be significantly higher for those who pursue multiple or extended courses, with interest rapidly inflating the amounts owed. In the 2023/24 financial year, 2.8 million people in England made a student loan repayment. Despite this, the majority of those repaying their loans owe more than £50,000, though only a small fraction are burdened with debts exceeding £100,000.

In April, the highest reported UK student debt was over £231,000. Just three months later, that figure has risen to £252,000. Tom Allingham from Save The Student described such debts as “alarming” but noted they are not representative of the norm. The National Union of Students (NUS) has criticized the lack of substantial reform proposals from major political parties.

Personal Stories of Heavily-Indebted Graduates

BBC News has featured stories from graduates struggling with substantial debts. Titi, a senior electrical engineer from Croydon, has seen his student debt—over £128,200—rise by £788.11 between April and June 2023 due to nearly 8% interest rates driven by high inflation. He expressed frustration over the increasing balance and the perceived profit-driven nature of the interest rates applied to loans.

Dr. Abbie Tutt, a foundation year 2 doctor, has amassed more than £101,500 in debt. Although she is relieved that student loans do not impact credit scores, she is concerned about the prolonged repayment period and the significant difference in debt levels compared to older colleagues.

Calls for Reform

The current student loan system, introduced with the tripling of tuition fees over a decade ago, is under scrutiny. Many graduates who borrowed “exceptional amounts” on Plan 2 loans are unlikely to repay the full amount, according to Ben Waltmann from the Institute for Fiscal Studies. High debts are attributed to multiple factors, including the pursuit of multiple or lengthy courses and additional funding for compelling personal reasons.

Chloe Field, the NUS vice president for higher education, highlighted that means testing of maintenance loans often results in higher debts for students from working-class backgrounds, who then repay their loans more slowly and accrue more interest. Save The Student’s Tom Allingham emphasized the shock of discovering that dozens of graduates owe more than £200,000 each.

Political Responses

Despite the alarming debt figures, none of the main political parties have proposed substantial changes to the student finance system in their election campaigns. The Conservatives have frozen tuition fees and assured that no one pays back more than they borrowed in real terms, but have not put forward new proposals. Labour acknowledges that the current higher education funding system “does not work” and promises to create a secure future for higher education, while the Liberal Democrats, Green Party, and Reform Party have suggested various reforms, including reinstating maintenance grants, abolishing tuition fees, and scrapping interest on student loans.

The Department for Education declined to comment on the issue due to pre-election period restrictions.

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