Graduates ‘Face Debt Sentence’
Keywords: student, debt, rises, credit, cards, secured, loans, personal, finance
Young people are delaying buying a home and starting a family as they face an increasing “debt sentence” after leaving university, it has been suggested.
According to a study carried out by uSwitch, those graduating from higher education this year will owe a total of 3.2 billion pounds via student borrowing, more than twice the 1.2 billion pounds run up in 1997. Despite 49,300 (17 per cent) of students will be 11,000 pounds in the red, findings from the price comparison website showed that 14,500 (five per cent) around debts of more than 20,000 pounds, with some respondents having more than 30,000 pounds to pay back.
Overall, it was predicted that it takes the typical graduate 11 years to pay off their debts. As a result, an estimated 35 per cent of recent graduates are set to put off raising a family, getting married or making their first steps on the property ladder by an average of six years because of the financial pressures placed on them by student debts.
Mike Naylor, personal finance expert for the price comparison website, 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 pounds”.
“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. Since 1997, three million graduates have delayed getting married, having kids or buying a house by at least six years due to the crippling effects of student debt”.
According to uSwitch, pressure on graduates’ finances is being “compounded” by surging house prices. Over the last ten years property values were reported to have risen by 203 per cent to 179,322 pounds. Meanwhile, with student debts increasing by 167 per cent and graduate starting salaries showing a rise of 51 per cent, the price comparison website reported that consumers are not only being “lumbered with excessive levels of debt, but they are also being priced out of the housing market” as an increasing number struggle to make secured loans repayments.
Findings from the firm also revealed that 26 per cent of recent graduates are delaying getting married for an average of six years due to the strain of student debt, with 53 per cent put off from getting on the property ladder. Meanwhile, just under a quarter (23 per cent) of those who have left university recently are said to still be living at home with their parents. In addition, the study showed that about 270,873 respondents would be open to the concept of bankruptcy as a way of relieving the pressures of loans and credit cards.
Earlier this month, a study by F&C Investments showed that parents are underestimating the monetary strains that going to university can place on both their children and themselves. According to the financial services provider, just under half of mums and dads surveyed do not know how much tuition fees will cost. Meanwhile, 70 per cent of respondents are not setting any money aside to help put their offspring through higher education, in spite of the average graduate being said to leave with debts of 13,252 pounds.
Abbi Rouse writes for AllAboutLoans.co.uk, an online loans comparison site, visit us today for information on all loan topics including cheap loans applications and online loans sourcing from all leading UK providers. Our Site: www.allaboutloans.co.uk
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