27+ Surprising Student Debt Statistics for the UK

Fact-checked

The increase in outstanding student debt in the UK is a cause for concern nationwide, with a growing number of young people contemplating whether higher education is worth the price. According to UK student debt statistics, the rise in interest rates and the lifelong debt accrued through student loans are scary prospects for current and future students and present a real threat to high education in the UK. However, not everything is as bleak as it sounds – in some cases you don’t even have to repay student loan debt! Check out the following statistics to find out more about UK student loans.

UK Student Debt Statistics: Fascinating Facts

  • UK graduates owe the largest student loan amounts in the developed world. (Source: House of Commons Library)
  • The US, renowned for its substantial student debts, leaves graduates with significantly less debt than the UK. (Source: Financial Times)
  • The average University student in the UK will accrue more than £50,000 in debt before they complete their education. (Source: House of Commons Library)
  • Student debt in the UK has been rapidly increasing for the past five years. (Source: Gov.uk)
  • Much of the loaned amount in student debts will never be repaid. (Source: House of Commons Library)

The History of Student Loans

Student loans haven’t been around forever – in fact, they’re a relatively new concept in the UK. How did they come to be and how did the student loan interest rate change over time? Let’s take a look at the young history of student loans.

#1 In 1998, common maintenance grants were replaced by repayable student loans

(Student Loans Company)

The Teaching and Higher Education Act that passed in 1998 replaced maintenance grants for students with loans that have to be repaid after graduation.

#2 More than one billion pounds were issued in loans in the first year after the reform took place

(Student Loans Company)

One year after the student loan repayment system in the UK was established, the Student Loans Company (SLC) gave out £1.23 billion to those in school.

#3 The Student Loans Company was first established in 1989

(Student Loans Company)

Although the SLC has been around since the late 80s, it used to serve a different purpose – it would give out grants and loans that helped students with living costs. However, the introduction of tuition fees in 1998 called for a change in the SLC structure. Since 2006, they have been giving out loans under income-contingent repayment (IRC) that cover tuition and living costs.

The Need-To-Knows

Before diving into the numbers indicating the current state of student loan debt in the UK, there are certain things you need to know about the nature of student loans.

#4 You can get maintenance loans to help you cover living costs while you’re studying

(Money Super Market)

The maintenance loan is intended to cover your living cost – this is used to help pay for food and rent if you live away from home. The maximum loan amount you can get if you’re away from home is £9,203 (£12,010 if you live in London), while if you live at home, you can get up to £7,747. Since these amounts are not substantial, you’ll need to learn how to save money.

#5 There’s a cap on the tuition loan at £9,250 per year

(Money Super Market)

You’re probably wondering: how much is the student loan? The maximum amount you get for tuition fees is £9,250 per academic year. This money is paid directly to the university and only covers tuition – books, stationery, course materials, and lab equipment are not covered by this amount, so you’ll have to pay for it with your own money.

#6 The first April after your graduation is when you begin to repay your student debt

(Oxford Brookes University)

Once you graduate, you need to begin to repay loans as soon as April comes, but only if you’re employed and your earnings exceed £27,295. If you’re earning more than the allotted sum, you need to pay 9% of your total income towards student loan rates – and if you don’t earn as much, you don’t have to pay anything!

#7 Students can get up to £6,000 per year for studying at a private university

(Practitioners)

Even though the government gives out loans to undergraduates studying at private universities, the maximum amount students can get is £6,000 per year, regardless of the price of the courses – and they often cost more than £6,000.

#8 Part-time and postgraduate students can also get loans for tuition fees

(Money Saving Expert)

40% of all undergraduates in the UK are part-time students; the maximum student finance amounts they can get is £6,935 per year. Postgraduates receive different amounts depending on what they’re studying – master’s students can get £11,222 and doctoral students can get up to £26,445.

#9 Disabled students can get additional financial help

(Student Finance England)

If you’re a student with a disability, you can apply for the Disabled Students’ Allowance that pays up to £25,000. The amount you receive depends on the disability or learning difficulty you’re facing, not on household income; this money doesn’t require repayment.

#10 Student debt is wiped after 30 years

(Money Saving Expert)

If you’re wondering how long does a student loan lasts, the answer is 30 years! If you don’t repay it in full, it’s automatically erased when 30 years have passed since your graduation. Technically, if you never get a job with a salary over the allotted threshold, you never have to repay your debt.

#11 You can repay student debt early, although it’s not advisable

(Money Saving Expert)

The system allows you to make payments that are larger than the 9% student loan repayment percentage, but just because this is allowed doesn’t mean that you should do it. Since debt is erased at the 30-year mark, the overpayment can be worthless, since it doesn’t reduce the capital amount you’ll have to repay.

#12 Debt collectors are not engaged in collecting student debt

(Money Saving Expert)

Student loan repayments are based on the UK tax system – the student loan amount is paid through the payroll, just like income tax, meaning that monthly payments will be automatically deducted from your salary. You don’t have to worry about paying installments on time and you don’t have to worry about debt collectors knocking on your door.

#13 Student debt can impact the ability to get a mortgage

(Money Saving Expert)

Student finance debt impacts mortgage approval rates, but not to a great extent, since your accrued student loans won’t appear on your credit file. However, your affordability checks will show that you have a lower monthly income because you’re repaying higher education loans, meaning your mortgage repayments have to be smaller. You can also learn more about secured loans and see if you’re eligible to get one!

Student Debt by Numbers

University debt is often discussed in the British media, but many people still have no idea as to the extent of debt and the effects it has on the nation. Let’s look at some of the numbers showing exactly how much British students have to pay.

#14 The outstanding student debt in the United Kingdom reached £135.62 billion in 2020

(Statista)

The total debt students in the UK owe is £135.62 billion – most of this is owed by English students (£121 billion), followed by £5.53 billion in Scotland, £4.69 billion in Wales, and £3.6 billion in Northern Ireland.

#15 The average English graduate owes £40.280

(Statista)

The average student debt in the UK varies by country – English graduates owe £40.280, followed by Welsh graduates (£24.960), Irish (£23.520), and Scottish graduates (£13.890).

#16 £17 billion is loaned to students every year

(House of Commons Library)

1.3 million university students apply for a loan every year; £17 billion is given out in student loans to new students every academic year.

#17 The current interest rate for UK student loans is 6.1%

(BBC)

The UK student loan interest rate is currently at 6.1% and this accrues large interest charges – students owe £5,800 in interest before they graduate! The rising interest rates have a significant impact on the overall increase of student debt.

#18 5.3 million people in the UK have outstanding student debt

(Department for Education)

The total number of borrowers in the UK that owe student debt is 5.3 million, which shows an increase of 6% from previous years.

#19 There was a 30% rise in student loans between 2016 and 2018

(Finder)

Between 2016 and 2018, the number of student loans increased by 30% due to a rise in living standards, the increase of tuition fees by 2%, and a rise in student loans interest rates in the UK. The increasing number of student loans means that there’s an increase in student debt as well.

#20 Only 991,500 people have fully repaid their student loans

(Department for Education)

The number of people that have repaid their total student loan debt in the UK since it was established in 1998 is 991,500, representing only 19.3% of all people that are liable to repay.

#21 A £9,250 course costs approximately £6,000 at the end of the 30-year mark

(Oxford Brookes University)

Most graduates never fully repay their debt, so courses that originally cost £9,250 will end up costing £6,000 once people have repaid a certain sum of their average UK student debt.

#22 The average UK student spends £795 a month at university

(Save the Student)

Besides tuition, students need a student budget of at least £800/month for other expenses. In case they don’t manage to acquire maintenance loans, these individuals need to find another source of student income, such as grants, scholarships, or bursaries.

#23 Student finance takes up to 6 weeks for approval

(UCAS)

If you were wondering how long does student finance take, it takes up to 6 weeks to be approved; the best thing is that you can even apply for one after you’ve begun your studies.

Past Regrets and Future Predictions

Many people regret their decisions regarding their higher education and there are several future predictions that predict what will happen with student debt in the future.

#24 37% of the UK’s former students regret going to university

(Aviva)

One in three millennials in Britain (37%) regret going to university – and almost half of them (49%) believe that they would have achieved the same success without a degree, without having to pay more or less the average student loan debt in the UK per person.

#25 63% of the millennial population is waiting on a miracle

(Aviva)

63% percent of millennials (two out of three) are relying on an unexpected event in the future to help them with finance payback – and this is true in particular among people that attended university (72% of former students).

#26 The percentage of undergraduates eligible for tuition is expected to grow by 5.9%

(Gov.uk)

The growth in the 18-year-old population and the increased interest in higher education indicate that the number of full-time students eligible for a loan is expected to grow by 5.9% – from 406,000 in 2019/2020 to 430,000 in 2025/2026, increasing the size of the average student loan in the UK per year.

#27 The student loans issued on a yearly level are expected to grow by £3 billion in the next five years

(Gov.uk)

In the financial year 2020/2021, £19.1 billion have been issued in student loans. This number is expected to grow up to £22.1 billion in the financial year 2025/2026. The projection is based on the number of loans expected to be issued and the expected inflation.

#28 The 2023/2024 financial year is expected to see the largest increase in student debt

(Gov.uk)

The UK student debt average is expected to grow by 4.3% in the year 2023/2024. After that, it’s expected that the number will slowly decrease.

#29 Only 25% of current students that have a loan will repay it in full

(House of Commons Library)

It’s projected that only 25% of all students that currently have a student loan will repay the full amount they owe to the government.

#30 Student debt is expected to reach £560 billion by the middle of the 21st century

(House of Commons Library)

Government projections show that student debt will continue to rise to £560 billion by the middle of this century, due to the rise of the average university fees in the UK, growing interest rates, and inflation.

Wrap Up

UK student debt statistics show that the amounts owed in student debt are not only crippling to the nation, but also to many former students that have to deal with substantial monthly payments, especially if they’re high earners. Several future predictions predict show that debt will continue to accumulate unless some significant changes are made to the student loan repayment system.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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