HALF OF GRADUATES KNOW ONLY ‘ROUGHLY’ WHAT THEY OWE
No idea how much student debt you have, how long it will take to pay back, or how much interest you’re being charged? You’re not alone.
New research shows that six in ten graduates don’t know how much interest they are being charged on their debt. One in eight don’t know how much they’re currently repaying each month from their wages, and one in ten say they didn’t even realise they were being charged interest. The figures – from the Debt Advisory Centre (DAC), a fee-charging provider of debt solutions, who surveyed 2,000 adults – also show:
- 20% of graduates under 24 years of age aren’t earning enough to make repayments (the threshold is currently £16,910 per year)
- 1 in 7 don’t think they’ll ever clear their student loan
- Just half of those with student loans say they know ‘roughly’ how much they have to repay
- One in five know exactly what is left to pay off
- One in seven say they have no idea how much student debt they have left to clear
So how much are you being charged for your student loan? It depends when you started your course. For those who started between 2001 and 2011, the interest rate on your student loan is currently 1.5%. For those who started in 2012 or later, the interest rate on your loan is 5.5%.
Despite the scale of the typical graduate debt (£40-50,000), many of you are surprisingly relaxed about it.
Two fifths of student loan repayers say they don’t worry about it at all as it’s so commonplace, and less than 10% of under-24s regret taking out their student loan. The news follows last month’s claims by a government minister that student loan repayments work out as just one ‘posh coffee’ a day. His maths was questioned and he was criticised for minimising the scale of young people’s debt.
*DO YOU WORRY ABOUT YOUR GRADUATE DEBT?
Are you earning enough to make repayments yet? Do you have any idea how much debt you have left to clear, or how much interest you’re being charged? Do you expect you’ll ever pay back the loan in full?
Mine’s around £21,000 I think. I’d have to track down my Student Loan Company password to get a better figure.
Since so many graduates aren’t paying a penny of it off and may never do so, is it surprising they don’t care what their Student Loan Co. debt is? Especially when many have student overdrafts to think of which do matter.
Of course the real worry is if Parliament ever retrospectively tries to change the repayment terms and makes it more like America.
For most post-£3000 a year fees students who stay in the UK, the tuition fee and maintenance loan is effectively a graduate tax over a certain threshold at present.
Mine’s close to £29,000 with continuously accruing interest. I am self employed and earn less than weekly Jobseeker’s at the moment, so a long way off affording repayments. My ‘pension’ stands at a whopping £1200. Even in employment, I was only paying back about £40 a month.
As for asking for repayments below that, I’d like to see them try. They think the protests were bad for the student loan rise, Imagine what would happen if they proposed that! If they tried reclaiming any, I have no assets anyway so they can suck it!
@JC: Exactly. There’s only so much blood you can squeeze from a stone.
I can’t believe it’s just 1 in 7 who don’t think they will repay their loan.
@Caroline:
Can’t find the original article I read months ago, but they aren’t far off according to some experts. Especially those who have to reach the £21k threshold before making repayments:
“Prof Barr’s comments come at a time when experts are predicting that less than 30 per cent of students will end up repaying their loans, leaving a potential £1bn in unpaid student debts.”
http://www.independent.co.uk/student/news/student-loan-system-is-unsustainable-claims-expert-10067998.html
Despite being on the 9k fees I will owe less than £30,000 due to living at home. However with a 6.3% interest rate I’m sure it will quickly balloon. I don’t think any of us care, to be honest. How can you possibly repay £50,000 + with a 6.3% interest rate? Might as well max out on student loans whilst you can and put down a deposit. The whole system is a car crash and it’s because there are simply too many universities and too many courses.
@Shane
“I will owe less than £30,000 due to living at home”
You say that like it’s not a lot, which is just incredible! It’s amazing that we seem to think it’s normal and acceptable for people to get this far into debt in just 3 years.
I’m Scottish so my tuition was free and I graduated with a debt of approximately £5.5k. I expect it’ll be paid off within the next few years.
I really feel for you guys who are getting into this much debt. As others have said, it’s best not to think about it and just pay it down as a sort of graduate tax until it goes away.
Keep your chins up guys!
I know, but it is just meaningless numbers at the end of the day. Unless I become a quant or a GP do you honestly think I will pay the government £30,000? It might as well be £100,000.
Personally I think it is disgusting that Scottish students got free tuition, and Welsh students pay a lower rate too. Absolutely disgusting.
My advice to the government – have a core of 75 universities and close / re-brand all the rest as technical colleges. Tuition fees paid only to sciences / healthcare / vocational skills and a handful to talented arts students.
The current system is absolutely f*cking stupid. As I say my debt may as well be £100,000… it makes no difference.
No, Shane, I don’t think you’ll repay the £30k. At the current rate I repay mine it’d take over 30 years; and that’s without interest! The current system is absolutely crazy, with even the government’s own figures saying it’ll be more expensive to the public purse than what it replaced.
“Personally I think it is disgusting that Scottish students got free tuition”
This reads like you’re angry, which is completely understandable, but also like you’re directing your anger towards us Scots and the Welsh. What’s disgusting is not that Scottish students’ tuition is free but that our English colleagues’ is not. I think (hope) that’s what you meant.
I, for one, agree completely that it is unfair but the problem is with our UK politicians and it is there that you should, that we all should, direct our anger.
Like many Scots I’ve benefited greatly from my free university education and I would love to see the same for everyone on these isles; so I hope my earlier post did not imply I thought your debt was acceptable.
Hi Fiona,
I was working doing some sums before. The present interest rate is 5.5% so if you have e.g. a £30,000 debt then it will incur £1650 within the first year. Of course, the loans start gaining interest the moment they are processed, so students will probably have around £5000 of interest added on by the time they graduate.
If you were doing a four year course and living away from home with maintenance grants, it’s not impossible that your debt could be £50,000. Now can you imagine the interest on that? Remember the interest grows every year as the amount grows.
As I say, impossible to service the debt unless you have a very well paying job.
Student finance have never contacted me. I think the last invoice they sent was around 5 years ago. Anyone else?