14 August 2007
As the new academic year looms for many undergraduates, new research has revealed it will take many students up to 11 years to pay back their student loans, with many even considering bankruptcy in an attempt to rid themselves of their debt burden.
According to new research from uSwitch, student debt has increased by 167% over the last decade, despite the fact that graduate salaries have increased by 51% during this time.
As a result one in ten students has considered bankruptcy as a solution to their debt problems, with the average student owing around £11,123 on graduation - a figure up by over £5,000 since 1997.
And uSwitch found that the debt burden does not end there, with 14,500 students graduating this year with a total debt of over £20,000.
Furthermore 35% of recent graduates stated that this level of debt is likely to make them put off buying their own home, starting a family or getting married by around six years.
Commenting on the situation, Mike Naylor, Personal Finance Expert at uSwitch.com, said: "The cost of attending university has risen over time, partly due to increased tuition fees and, to a lesser extent, due to increased housing costs.
"As a result, more money than ever is being borrowed by students to fund their way through university, with some students starting work with debts of up to £30,000.
"It is inevitable that this will have a knock on effect on their lives and future life events will have to be put on ice until the money is available.
"We urge students to think carefully about any money they borrow while at university. It may seem insignificant at the time, but interest can add up and it will have to be repaid eventually - taking most graduates beyond their 30th birthday to do so."
He added that both banks and the student loans company had a moral obligation to students to provide transparent advice on the best deal for them.
"Both the banks and the Student Loans Company have a moral obligation to ensure that students fully understand the debt that they are taking on and how much it is going to cost them. Otherwise students will start their careers shackled to debt which limits their options and narrows their horizons."
In the last ten years students have racked up £27 billion in debt.
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