Since 2012, students have had to swallow eye-watering fee hikes and sky-high interest rates on their loans, leaving many of them with around £50,000 of debt that they will have to pay back over the next 30 years. Asking students to make some investment in their future is reasonable, but debts at these levels are already damaging lives. Moreover, this has happened while the government has made unilateral changes to the terms and conditions. IF has already published reports on: the public benefit of higher education; the unsustainability of the student loan system; the erosion of the graduate premium; the long debt-tail of student loans.
Real Life Student Debt Stories
Listen to PASD supporter Carmel Neale’s interview explaining the debt her son will face over his working life.
“I am haunted by the fact that my profoundly deaf daughter could be robbed of any quality of life as she faces a 30-year-long debt. Her recent loan statement saying she owes £62,000, on top of the enormous challenge she faces in finding a job, is devastating.”
– Karen, mother
“It is deeply unfair that my son faces carrying a £50,000 debt and paying an extra 9% tax for the next 30 years of his life for a qualification that I got for free. We should be investing in our children’s higher education, not turning them into cash cows to be milked for the next 30 years.”
– Johnny, father
“Huge sums of money are being offered to 17/18 year-old school children with little or no experience of finance, tax or interest rates, believing the myth that ‘you never pay it back.’ No advice required, no warnings, no compulsory education beforehand. The first inkling of their true commitment only emerging when the first statement drops though the door, four years after they started university. In any other financial service this, together with the lack of information regarding the increasing debt, would be construed as mis-selling to a vulnerable age group.”
– Jennifer, mother
“My son is being charged £1,800 for a year out working even though he is not at uni at all, all year. The placement is nothing to do with the uni (he had to find it). He has to produce a 2,000 word essay, 25min presentation and 10,000 word journal that will be assessed next summer. Can there be any reason they are charging £1,800 for what can only be 3-4 hours work tops?”
– Terry, mother
“Why should my son, who has epilepsy, is struggling at university, and had to take time out, face so much debt over his lifetime? He is paying high fees and an extortionate interest rate. The government must address this.”
– Caris, mother
“Four years doing a master’s course in London, my daughter now has over £60,000 of debt, with interest accruing faster than she can pay off. She is struggling to keep working as she feels her situation is so hopeless – I raised my children to see debt as a negative and we never had credit cards etc and she feels completely overwhelmed with this ever increasing burden around her neck. How can this be right? Who is making a profit from these high interest rates being paid by these poor young people?”
– Joanna, mother
Below are key unfairnesses in the current system:
- Current students face interest charges at above-market rates (RPI+3%)
- From September 2020 students face a 5.6% interest rate
- Loan repayments at 9% of income over £26,575 on top of 12% National Insurance and 20% Basic Rate Income Tax means a marginal 41% tax burden & that’s before 2% auto-enrolment pension contributions and high housing and living costs
- Top uni pay has sky rocketed with the Top 10 Vice Chancellors (VCs) earning more than £400,000 a year, and one earning more than £500,000 (Imperial)
- Average uni halls accommodation now costs around £125 per week
- Maintenance grants to help the poorest students have been withdrawn, forcing them to take larger means-tested maintenance loans
- Means-tested maintenance loans have a built-in mechanism that expects parents to cover the difference between the amount given by the Student Loan Company (SLC) and actual living costs. Few parents realise that they are expected to contribute.
What can I do?
- Share your story to show your support. Email [email protected]
- Write to your MP to demand action to stop further fee hikes
What we’re calling for:
- Reduce the high debt and tax burden on graduates, by sharing the cost of educating our future workforce more fairly
- Restore maintenance grants for students from poorer families to allow them to be able to afford to go to university
- Stop student loans increasing in real terms by pegging interest rates to true inflation
- Play fair with young people: guarantee the terms of borrowing and repayment, and return student loans to the protection of the Consumer Credit Act.
- Show students value for money: make institutions open their books on how student fees are spent
- Stop universities and/or private providers from increasing uni accommodation costs above inflation
- Stop peddling the myth of the “graduate premium”, which promises unrealistically high salaries for graduates