Student debt up by 10%, says survey

Student debt up by 10%, says survey

Student debt rose by 10% last year, putting the average university graduate £12,069 in the red, according to a new survey out today.

Barclays Bank said graduate debts had increased by nearly 500% since it began its annual survey in 1994 when students leaving university owed an average of just £2,212 each.

The bank warned that if these trends continued, students could be graduating with debts as high as £33,708 after a three-year degree by 2010, taking into account the government's plans to start charging variable tuition fees of up to £3,000 a year from 2006.

The longer term effect would be that youngsters would be saddled with debt for longer and would lose out in other ways by being unable to get on to the property ladder or start paying into a pension until much later in life, Barclays said.

But the higher education minister, Alan Johnson, dismissed the survey as "scaremongering at its very worst" and said it failed to take into account in its calculations changes to the student support system and the planned reintroduction this September of the maintenance grant.

Commenting on the findings, Jeremy Law, the head of student and graduate banking at Barclays, said: "As predicted, student debt is continuing its upward trend, although the rate of increase is the slowest it has been in the 10 years of our graduate survey.

"Escalation of graduate debt over the last decade is the net result of rising cost of.....continued below

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living, continued impact of the introduction of tuition fees and abolition of the grant system.

"If this trend continues, graduate debt could reach as much as £33,708 for students leaving a three-year degree course by 2010, including the proposed increase in tuition fees.

"The knock-on effect will be that graduates are saddled with debt for longer and unable to get on the housing ladder or make appropriate pension provision until much later on in life."

The research also reveals that graduates who studied in the south-west now have the greatest debt - £14,802 on average, compared with those who studied in the Midlands who have the least debt at £11,484 for each graduate.

This reflects the wide variation in the cost of living around the country.

Almost half the students in the survey said they were worried about how they would pay their debts back, to the Student Loans Company, banks and credit cards, as well as to their parents.

The Barclays annual graduate survey was conducted by NOP World Financial in February, and questioned 2,014 graduates who finished their degree in the past two years.

Mandy Telford, the president of the National Union of Students, said: "There is no doubt that introducing a market and variable top-up fees will force students who do not want to take on bigger debts to study on the cheapest courses."

Student debt had a huge impact on what graduates did next. "Many may be forced to return to live with their parents and only be able to seek work locally," she said.

"For the majority, life choices, such as buying a house, getting a mortgage, getting married or even contemplating trying to start saving, will remain a pipe dream until they have got on top of the huge millstone of debt from their student years."

But Mr Johnson maintained that the average anticipated debt of final year students was currently £8,666.