Most students will never repay student debt

12/08/2011

The probability of graduates ever being able to repay their student debt is looking less likely, with even those earning £30,000 unlikely to shed the burden, whether their course costs £6,000 or the maximum £9,000 a year.

Independent money lending expert Martin Lewis said students shouldn’t be too concerned with paying back huge student debt as the current payment system makes it ‘irreverent.’

After graduating students will only have to start repaying their student debt once they are earning over £21,000 a year and will be charged 9 per cent of any earnings over that threshold.

More than a third of English universities are due to charge £9,000 as standard from 2012, while three fifths will charge the maximum for at least one of their undergraduate courses.

However, the student union leaders said the planned higher fees could still put potential students off.

Calculations by Martin Lewis, from finance website MoneySavingExpert.com, show that students studying away from home who start on a salary of £40,000 will pay back an annual tuition fee loan of £6,000 after 24 years on average.

Even if their fees were the maximum £9,000 a year, for three years, they would continue making payments for an extra six years but would not pay back the full sum.

Liam Burns, president of the NUS, told the Metro: ‘This demonstrates yet another flaw in the government’s botched plans for higher education.’ A government spokesman said about a quarter of graduates with the lowest earnings over their lifetime would pay less than under the current system.”

Tags; Budgeting Advice, Income Worries and Debt, Recent Graduate Debt,

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