Is Student Debt Preventing a College Education?

Has the Switch from Grants to Student Loans Affected Attitudes?

Jul 20, 2009 Asa Ghaffar

Student debt has risen considerably over the past decade. Has the student loans system deterred young people from pursuing a college education in the UK?

Student debt has increased considerably since student loans replaced the grants system in 1990/1991. According to an article in The Guardian, bleak employment prospects have meant that the number of full-time students has increased by 10% in the last 12 months alone. Student finances may be strained, but a college education has rarely been more popular, particularly amongst older students.

Student Debts Increase

The Barclays Student Debt survey took place between 1992 to 2002. During this period, the amount owed increased from £1,800 to £7,400.
The Barclays Graduate Debt survey between 1994 and 2004 showed that debt had increased from £3,100 to £14,700.
A 2007 push.co.uk survey estimated that full-time students commencing their degree in 2006/2007 should expect to owe £17,500 upon graduation. This figure is expected to increase to £21,500 for those attending university just 12 months later.

Student Debt Grows Fastest in Lower Socio-Economic Groups

A comprehensive 2007/2008 Student Income and Expenditure Survey found that debt is growing most quickly amongst full-time students from routine/manual socio-economic backgrounds.

Whilst the amount owed by those from professional families was £8,700, those from working class families owed £9,400.
Full-time students from single parent families owed an average of £10,900, whereas couples with children owed £7,600.
Higher borrowing levels were also found amongst those living away from home, the disabled and medical students.

However, the median level of borrowing amongst ethnic minorities was 17% less than amongst Caucasian students.

Attitudes to Student Loans and Debt

25% of full-time students in 2007/2008 were reluctant to attend full-time education because of student debt concerns. Interestingly enough, this figure is lower than in 2004/2005 where 26% has raised this concern.
Financial worries were again greater amongst lower socio-economic groups (37%) than professional classes (17%). The figure was 23% for intermediate groups.
Whilst 86% felt that the benefits of a college education outweighed the costs in 2004/2005, this figure has now fallen to 82% in 2007/2008.
Only 9% of all those questioned said that financial difficulties affected their ability to study a great deal. The principle reasons cited were stress and worry, the cost of course material and the need to find a part-time college job.

Rising unemployment has meant that a number of full-time students aren't currently considering the long-term effect of student debt. It is no coincidence that the number of individuals seeking a college education has swelled at the very time that job opportunities are lowest.

Sources

Bolton, Paul. (5 May, 2009). "Student and graduate debt statistics." The House of Commons.

Curtis, Polly. (9 July, 2009). "Figures reveal shortfall of nearly 50,000 university places." The Guardian.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.

The copyright of the article Is Student Debt Preventing a College Education? in Mortgages/Loans is owned by Asa Ghaffar. Permission to republish Is Student Debt Preventing a College Education? in print or online must be granted by the author in writing.