Brighton has a large student community with two major universities and various specialist collages being based here. With an estimated population of around 278,000, and around 45,000 students, Brighton’s student populace makes up just over 16% of the entire population.
The disposable income that many students carry around in their pockets is widely accepted as bringing heightened levels of consumer activity to towns and cities with universities, but the other side of this consumer power is huge amounts of student debt.
The average debt taken away from universities by students is between £40,000 and £50,000, depending on the amount of money needed by students as a maintenance loan. If we take the lower end of this average as a conservative figure, then the student population in Brighton totals in at a huge £18,000,000,00!
A worrying cause for concern arises alongside this figure when we acknowledge the findings of a major 2014 study by the Institute of Fiscal Studies into university funding (entitled ‘Payback Time?’), which estimated that around 73% of graduates won’t have paid their full loan back after 30 years.
So either you’ll be lucky enough to be in the top group of graduate earners, or you’ll never pay everything back. For this reason, paying your loan back early isn’t always worth doing, either.
Loan repayments in the UK are dependent on graduates’ income once they start working, with those earning more than £21,000 a year required to pay. Graduates earning at that level are obliged to repay 9% of what they earn above £21,000. However, after 30 years, any outstanding student debt is written off.
Sebastian Burnside, a senior economist at NatWest, said student debt was rising at a faster pace than any other form of debt, and eclipsed credit card debt of £68bn. “These latest figures show student debt is becoming of greater priority with every passing year. Student debt is the fastest growing type of borrowing and is rapidly becoming economically significant.”
Martin Lewis, founder of the website Money Saving Expert, said that although the rise in outstanding debt increased the amount of money owed to the exchequer, it was irrelevant for students. “This is meaningless for students and graduates as individuals. It is a public policy and taxpayer issue.”
Vieru said: “These figures show how the cost of education has been systematically shifted on to the backs of individual graduates, in debt that will never be repaid.
“These figures raise serious questions about whether these loans are the best way to fund our education system and what’s best for the sector, taxpayers and the public.”
Burnside said student debt was an additional drain on people’s resources for an “astonishingly long time”, sapping the purchasing power of the graduate population.
He said it was unclear what the longer-term implications of rising student debts in the UK would be, following the introduction of the £9,000-a-year tuition fees. “We don’t yet know how graduates will respond, how it will affect their attitudes to pensions, savings, buying a house.”