- Tuesday, July 02, 2024
Data from the Student Loans Company (SLC) revealed that over 61,000 people have debts exceeding £100,000
By: Pramod Thomas
NEARLY 1.8 million people in the UK now owe at least £50,000 in student debt and 50 people owe more than £200,000 each, the BBC reported.
The figures from the Student Loans Company (SLC) revealed that over 61,000 people have debts exceeding £100,000.
These statistics were disclosed following a Freedom of Information (FOI) request for details on loan holders with above-average debts who are eligible to start repayments.
The SLC previously reported that the average debt for loan holders in England upon beginning repayments was under £45,000. However, new government data indicates this figure has risen to £48,470.
Debts can be much higher for those pursuing multiple or extended courses, with interest causing rapid increases.
In the 2023/24 academic year, about 2.8 million people in England made a student loan repayment, as per government figures.
This suggests that while only a small percentage of those repaying their loans owe more than £100,000, most have debts over £50,000.
Earlier this year, the BBC reported the highest UK student debt at over £231,000. Within three months, this amount has risen to £252,000.
Tom Allingham from Save The Student called such debt levels “alarming” but said they were “not typical.”
Personal finance expert Martin Lewis told the BBC that student debt should be viewed more like a “limited form of graduate tax.”
He explained: “For most students, it’s not about what you owe but what you earn—you repay 9 per cent of earnings above a threshold.”
For instance, those with “Plan 2 loans” repay 9 per cent of earnings over £27,295.
The National Union of Students (NUS) criticised the main political parties for not offering “reform” of student finance in the election campaign.
Student debts are written off at the end of the loan term, which can be 30 or 40 years, depending on the course and start date.
Graduates with substantial debts have expressed concerns about the current system.
Titi, a senior electrical engineer from Croydon, has seen his student debt, which is over £128,200, grow by £788.11 between 6 April and 6 June this year.
“No matter how much I pay, it always increases,” he said, noting the nearly 8 per cent interest rate on his account due to high inflation.
The 43-year-old father said he feels it’s impossible to pay off his debt after studying for four years at London South Bank University and two years for a Higher National Diploma.
Titi worries that some people might be deterred from pursuing higher education when they consider potential earnings without a degree.
It’s been over 10 years since tuition fees were tripled in England. Since 2017, fees have been capped at £9,250 per year across the UK, though Scottish students pay a maximum of £1,820.
Ben Waltmann from the Institute for Fiscal Studies said that those who borrowed large amounts under “Plan 2” loans are unlikely to repay the full amount.
However, Claire Callender, a higher education policy professor, told the BBC that high debts could negatively impact graduates’ lives.
Nick Hillman, director of the Higher Education Policy Institute, said he was “shocked” by the number of people owing over £200,000 in student debt.
The SLC said that high debts might include multiple loan products, such as Advanced Learner Loans for further education courses, funding for undergraduate, postgraduate Master’s, and Doctoral courses.
Despite owing over £101,500, foundation year 2 doctor Abbie Tutt appreciates that student debt does not affect credit scores.
However, Dr Tutt, who posted a video on social media “celebrating” her balance exceeding £100,000, is unhappy about the long repayment period.
Dr Tutt told the BBC, “If you’re going to university because you love it and will get a good job and be happy, then it might be worth it. But it’s troubling for those in significant debt without good job prospects.”
Chloe Field, the NUS’ vice president for higher education, said means-tested maintenance loans often leave people from working-class backgrounds with the most debt, as they can claim more funding.
“They also generally repay their loans slower and thus pay more in interest,” she said.
Both the Tories and Labour are not proposing new changes to tuition fees or student debt. The Liberal Democrats want to restore maintenance grants for disadvantaged students and review higher education finance. The Green Party aims to abolish tuition fees, while Reform intends to eliminate interest on student loans.
The Department for Education declined to comment due to pre-election restrictions.
