FOUR IN TEN SAY CRIPPLING DEBT PUTS THEIR LIFE ON HOLD
Spiralling student debts are forcing almost four in ten graduates to put their life on hold, according to a new survey. Many say they are postponing parenthood by at least five years.
Research shows that three in ten graduates are forced to delay staring a family and over a quarter have put off getting married because of student debt. Nearly half of graduates say they have postponed buying a home.
Of those who said they’d had to put life plans on hold, three in ten said they had delayed starting a family by at least five years. Over a quarter said they had put off getting married by at least five years.
Shiv Malk, co-author of Jilted Generation: How Britain Has Bankrupted Its Youth, told Graduate Fog this morning:
“These new figures are deeply worrying. We have known that something serious has been happening among our nation’s young people.
“We knew that they were feeling the squeeze in terms of jobs and housing – but it truly awful to see that their financial position now seems to be so deeply affected when it comes their big ‘life decisions’ like getting married and having children.
“On top of that these stats suggest they also lack the confidence that things are going to get better any time soon. The government needs to act fast if we are to reverse this terrible trend.”
The figures – from price comparison site uSwitch – come from interviews with over 1,000 graduates who graduated in the last five years.
They also offer a worrying glimpse of the true state of the average graduate’s finances. Over two-thirds of graduates said they had underestimated the amount of student debt they would incur – and one in five said they would consider bankruptcy as a solution to their debt problem. Over half of graduates said their student debt means they’ve had to wait to start saving and a third said they couldn’t afford to start a pension.
The numbers also suggest that many graduates have their heads in the sand when it comes to thinking about their personal finances. Four in 10 (40%) don’t know the rate of interest charge on their student loan and 14% have no idea what they are being charged on their overdraft. And, despite the fact that almost nine in ten graduates took out a student loan, one in five wrongly believes that student loans are interest-free. A further fifth said they had no idea how students loans are calculated or paid back.
More than three quarters of graduate said they don’t think enough is being done to inform students on debt, budgeting and finance.
Michael Ossei, personal finance expert at uSwitch.com, said:
“The fact that graduates have to put their life on hold because they are knee deep in student debt is a sorry state of affairs. And as fees go up, students risk running up even bigger debts. But without a degree getting a job in today’s stagnant market may be even harder. Going to university used to be the norm, but it is now becoming a catch 22.
“It is also worrying that students are going to university blind to the financial implications. Higher fees and lack of job prospects may be out of your control, but if university is right for you it’s more important than ever that you are as financially prepared as possible. Getting a student loan may be the only way to fund university, but it’s vital that you get clued up on the system. And when you graduate make sure you understand where you stand financially and how to avoid falling further into debt.”
*Are you putting your life on hold because of your student debt?
Could you afford to have a baby, get married or buy a house in the next few years? Did you understand the true extent of the debt you were taking on when you enrolled for university? Should students and graduates be given better financial advice to help them understand how to manage their debt?
I graduated in 2008. I came from what I suppose could be regarded as an ‘unusual’ background- my guardians were both retired by the time I came to apply for student support. As a result, I got full loan of over 4K for every year of my studies (this took five years due to a health issue which caused a number of problems during my course). I now owe over 20K to the Student Loans Company. I am currently earning a gross of just over 17K a year, which means that all in I’m paying back the princely sum of £16 per month. So obviously, assuming I don’t earn much above that throughout my career (looking more and more likely- I am an administrator and am happy being so, but from what I can see jobs like mine rarely pay well), this loan ain’t getting paid.
What I’m about to say may sound very terrible, but hear me out. I got into credit card debt while I was at university to the tune of just under 5K. Why? I was totally unprepared for living alone. I received no tuition in budgetting or how to control my finances, and when I cam eot university in 2003, credit was easy to come by. Do I blame the credit card companies? No, not really. They never checked that I had the means to pay a credit card bill, and for that they should be ashamed of themselves, but in my heart of hearts I know I couldn’t pay it either, and still took the debt. Why? Because I wanted my degree, and there was no support anywhere else. I did work part-time, and I’m proud to say that the debt is cleared now, but unfortunately, had I not taken the debt at that time, I would have had to drop out. Bottom line.
I would never discourage anyone from taking risks to pursue their interests and passions. But I am a vocal advocate of preparing students for university with proper, practical edication as well as academic schooling. At 18 I’d never lived away from my loving but protective grandparents, and didn’t even have a complete grasp of how credit worked. I was as green as they come, and had to learn the very hard way (debt collectors letters, threats of court action/home visits, harassing phone calls- I could write you a very persuasive piece on the corruption of the debt collection trade I cna assure you!).
Teach budgets, money, credit at school, so that students can head debt off at the pass as much as possible.
As to the student loan, it comes off my wages. I know it sounds irresponsible, and I don’t advocate my own attitude (!), but I thikn of it as a tax rather than a debt. Naive maybe, but it helps keep my head up and depression at bay.
I disagree. I think that it is the parents/guardians who should be teaching their kids about the value of money, budgeting and other areas that may be grey to students. I really think that we should take responsibility for our own actions in terms of money.
My dad did not let me take out a student loan in my first year of uni and that was a mistake as it really made it tight for money. I got a job and worked 4 days a week all through uni and then every day in the holidays. I managed to have a social life, be president of a university club and be a student representative, as well as gaining a 2:1 in my degree. I did not know what I wanted to do but I was thinking about my future and i knew that having a job part-time and doing extra curriculars would look good on my CV. This was not something I necessarily learnt from my parents but I think they drilled into that I would not get nothing for nothing, but to also to make sure that I got something for something too.
@jamie
You deserve a lot of kudos for getting through university as you did. Admittedly I’m not entirely clear how you managed to earn enough from one part-time job to pay rent, food, bills etc- I worked part-time but wasn’t earning nearlyenough to cover that without loan.
You say you had no loanin first year- can I assume you did have a loan for subsequent years?
Also should have made the point about the role of parents- I agree that in an ideal world the parents will prepare their kids for what to expect. My grandparents had never had any child go to university, much less a grandchild, and in many respects were as green as I was in that regard. I don’t blame them because I know it was new ground for them too.the end result, though, was that no-one did prepare me. And I maintain that you do need to be taught these things- we aren’t born with a concept of money, so that is nurture rather than nature.
Honestly I wouldn’t have cared who took ownership of my practical education, I just wish someone had, thats all.
Just had a thought- when I was at school, we had Personal and Social Education (PSE)- not sure if this is still the case. It was an hour a week which formed almost an extended registration period on a Wednesday morning. It was basically a free-for-all. The children would sit and chat; on a good day we were given something arbitrary to do. Over time, this became the session used to coach us for our UCAS applications.
Assuming this is still the case (and I’ve not had any contact with secondary education since I left it in 2003, so it very well may not be), why not encorporate lessons in the practicalities of university education? It wouldn’t need to be intensive, just covering some of the basics- keeping a budget, where to look for part-time work, the bills you’ll need to pay and how to pay them, how to make your money go further etc. It could even form a sort of research homework if class time was limited. That way, you’re legislating against some kids leaving home clueless because they were the unfortunate few/many who weren’t primed for it by their parents. After all, where do we draw the educational line between parenting and teaching? Surely it’s subjective. Some people may not feel that Home Economics or PE are the realm of the teacher, because it falls to the parents to teach their kids how to cook and look after their bodies. Yet an education in the frustrations of keeping your own booksin order as no less practical than these things.
@Rebecca
I agree that leaving this responsibility solely with parents is probably a mistake. For one thing, what the hell do THEY know?! Things have changed immeasurably since they were (or weren’t) at university. Everybody is groping around in the dark here. In all honesty I think most people would struggle to assess the true ‘value’ of any given degree in advance. Which is crazy!
@Tanya
Neither of my parents went to university, and none of my grandparents did either, so in my case they knew zilch. I am glad I did my degree. It was hard because I was sick and broke, but at the same time it afforded me a real sense of personal achievement. I suppose that at this very moment the actual practical value of it seems questionable, but it’s early days and it could take me places. However, at secondary school, the UCAS form was given to me and that was that. There was no question of alternatives. I’d still have gone to university even if the alternatives had been discussed, but in retrospect I think it would have been better if I’d had all the options laid out for me.
A situation where we are afraid (?) of being straight down the line with youngsters is perhaps a situation which has gone beyond our control?
I had a similar experience when I was at Sixth Form College. It was a case of “where do you want to go to university?” and “what do you want to study at university?”. “Do you want to go to university?” was never asked and there was no discussion of the pro’s and con’s of going to university vs. getting a job at 18. We were also given some pretty dodgy advice such as “any degree is better than no degree”. I think schools like to have good statistics on how many of their students go on to university.
In my case I still feel that going to uni was right for me and in the long run I will benefit from having a degree but I wish I had made more of an informed decision. I certainly didn’t understand how my student loan would work, I’m lucky in that my parents are very good with financial stuff but not everyone has clued up parents.
The only good thing about these sky high tuition fees is that its making youngsters and their families think about the pro’s and con’s of a degree and getting into debt.
I cannot get married because I cannot obtain a suitable job.
@ Catherine
Yes, that sounds very familiar.
@ tariq
My partner and I are in the same position- and buying a house is absolutely out of the question at the moment too.
@Catherine
I think what you describe is very typical – and I think it’s right that we look at ways of equipping students (and their families) with better info so they can make informed decisions about whether university is a good investment for them or not…
I believe that my degree has made me worse of financially then I would be if I had not done a degree because I have a student loan to pay back.
Meanwhile, the ones who dropped out of school early are now on their 7th child and have their own house and income in benefits.
“The average wedding cost is expected to be around £18605 in 2011.”
That’s the debt I graduated with in 2005 (it’s untouched at about 20k now). While I resent having debt hanging over me, I would not have done anything differently. It was worth it.
What I wonder is how it’s considered ok to spend 18k+ on one day (for something which could surely cost next to nothing?) but not a 3 or 4 year degree?
Great post! I am a university student myself.