- 1.8 million students owe over £50,000 in debt
- 61,000 owe over £100,000 in loans
- Interest causes balances to increase rapidly
About 1.8 million people in the UK have at least £50,000 in student debt.
According to Student Loans Company (SLC) records, over 61,000 people have sums of more than £100,000, with another 50 owing more than £200,000 each.
The numbers were disclosed following a Freedom of Information (FOI) request for the number of loan holders with higher-than-average debts eligible to begin repayments.
The SLC previously stated that the average debt for loan holders in England when they begin making repayments was less than £45,000. According to new government figures, the amount has grown to £48,470.
Balances can be much more significant for those who take many or lengthy courses and frequently increase swiftly with interest.
According to government numbers following the FOI response, around 2.8 million people in England repaid their college loans in 2023/24.
That means that a tiny percentage of people repaying their amounts are in debt for more than £100,000, yet the vast majority owe more than £50,000.
The most significant UK student debt was more than £231,000. Three months later, the figure had risen to £252,000.
According to Tom Allingham of the website Save The Student, such balances were “alarming” but “in no way indicative of the norm”.
Personal financial expert Martin Lewis said that loans could be viewed as a “limited form of graduate tax”.
On Radio 4’s Today show, he highlighted that “student finance for the vast majority of students is not about what you owe, but what you earn – you repay 9% of everything above a certain threshold.”
For example, persons on “Plan 2 loans” would pay 9% of all earnings above £27,295.
The National Union of Students (NUS) has called it “ridiculous” that none of the major parties are offering “reform” of student funding during the election campaign.
Debts are written off at the end of the loan term, regardless of the amount owed. The periods are often 30 or 40 years, depending on your course and start date.
Titi, a senior electrical engineer from Croydon who requested that his full name not be published, had his student debt, which is more than £128,200, increase by £788.11 between April 6 and June 6 this year.
“No matter how much I pay, it is always increasing,” he remarked, referring to the nearly 8% interest rate on accounts like his, which is caused by solid inflation.
The 43-year-old father of one said that he believes it will be hard to repay the debt in full after completing a four-year term at London South Bank University and two years studying for a Higher National Diploma.
“It seems like a money-making avenue when you look at the (interest) rates applied to the loans,” he told me.
Titi expressed concern that some people will be discouraged from pursuing higher education “when they do the calculations” and assess how much they could earn without a degree.
It has been over ten years since tuition fees in England were increased. Since 2017, costs have been capped at £9,250 per year across the UK, with Scottish students charging a maximum of £1,820.
According to Ben Waltmann of the Institute for Fiscal Studies, many people who borrowed “exceptional amounts” on so-called “Plan 2” loans, which were launched after fees were tripled, are unlikely to repay the total amount.
However, Claire Callender, a professor of higher education policy and deputy director of the Centre for Global Higher Education, warned the BBC that such large debts are “likely to hurt graduates’ lives”.
It is unclear whether the SLC’s most excellent debt, £252,000, is on the same loan as the one declared to be the highest in March, at £231,000.
Nick Hillman, head of the Higher Education Policy Institute, said he was “most shocked” by the number of people with more than £200,000 in student debt.
He stated that the data indicates that less than 50 persons owe at least £10 million between them.
“Clearly, at that level, the student loan system is not working well because these people will not pay it all back”, commented Hillman.
“People won’t pay it all back.”
In response to the FOI request, the SLC stated that people with higher-than-average balances “may be in receipt of several student loan products,” including an Advanced Learner Loan for further education courses and funding for undergraduate, postgraduate Master’s, and postgraduate Doctoral courses.
It added that other variables contributing to high student loan debt could include loan holders taking more or longer courses or having more than one loan plan type. The corporation also stated that certain students receive additional financing owing to “compelling personal reasons.”
Despite being in debt for over £101,500, foundation year 2 doctor Abbie Tutt is relieved that the system does not influence credit scores.
However, Dr Tutt, who posted a video on social media “celebrating” her balance reaching £100,000, is dissatisfied with how long she will pay it off.
The 27-year-old says the debt is heartbreaking compared to older colleagues who paid off their loans when the conditions were better.
She describes her debt as a tax. Dr Tutt said: “If you’re going to university because it’s your passion and you’re going to have a fantastic career and be happy, you can justify it.
“But I am uncomfortable with people being in that much debt and not getting a job.”
‘Ridiculous’
According to Chloe Field, the NUS’ vice president for higher education, testing maintenance loans frequently results in people from working-class families incurring the most significant debt since they may claim more funds.
“They also generally pay back their loans slower, and therefore end up paying more in interest”.
Save Mr Allingham continued: “The prior revelation that one graduate had student loan debt of over £231,000 was a watershed moment, which makes it even more shocking that dozens of others also owe more than £200,000.”
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The Conservatives claim that while in government, the party froze tuition fees and ensured that no one paid more than they borrowed in real terms.
However, the Tories, like Labour, still need to clarify new ideas about tuition costs or student debt.
According to Labour’s manifesto, the existing higher education financing arrangement “does not work,” and the party “will act to create a secure future for higher education”.
The Liberal Democrats want to immediately reinstate maintenance payments for underprivileged students and reassess higher education funding. The Green Party supports abolishing tuition fees, while Reform offers to eliminate student loan interest.
The Department of Education declined to respond owing to pre-election constraints.
