Even without student loans, graduates face twice as much debt as those who didn’t go to uni
Starting to regret my life choices
Uni students and graduates under 40 have almost double the amount of debt compared to people who didn’t attend uni. And that’s not even taking into account student loan debt.
Those who went to university owe on average £12,445 (not including their student loan repayments) compared to £7,105 for those who didn’t pursue higher education.
New research conducted by Equifax suggests this is partly because student loans are acting as a “gateway to more millennial debt.”
47 per cent of students said they’re more comfortable with borrowing, while 39 per cent are more likely to borrow because they have already taken out student loans.
This research comes after recent student loan reforms that could mean incoming students will have to repay around £400 more each year after graduating, with this number rising to £750 for next year’s entrants.
The proposed changes include stricter academic requirements to be eligible, higher interest rates, and a 10-year longer repayment period that means incoming students will have to repay increasingly more per year.
Equifax said the reforms are “expected to increase the debt burden for young graduates.”
Their findings show that 36 per cent of those who got student loans before these reforms found them unfair, and nearly half (47 per cent) think they’ll “create a generational divide between those paying and not paying the higher fees.”
National Union of Students (NUS)’s president Larissa Kennedy has described these proposed reforms as “classist, ableist and racist” after the Institute of Fiscal Studies (IFS) found that they can bar one in four Black students from uni.
But besides questioning the accessibility of uni, Paula Roche, Managing Director of Consumer Solutions at Equifax, thinks the current debt and loan situation also highlights the need for better financial education.
Their research found about a quarter of students were not taught about managing their finances before they turned 18 and still don’t know what a credit report is.
She said: “The research tells us that the experience of going to university and having a student loan makes people more likely to use other forms of credit in their 20s and 30s, more likely to have looked at their credit report, and more likely to be in tune with their finances overall.
“Whilst taking out different forms of credit isn’t problematic when managed responsibly and repaid on time, it’s important for all young people to understand the different types of credit available, and to have a clear view of how their financial history may influence their ability to access them.”