Money News

Graduates facing 11 years of debt seek “cheap” universities

By Martin Fagan - news@consumerchoices.co.uk

Financial burdens for new graduates are increasing but a bit of forward planning could pay dividends.

With spiralling tuition fees, parents and students are becoming increasingly aware of the financial and lifestyle implications of higher education, according to two new studies into student debt.

With the introduction of £9,000 tuition fees from 2012, 21% of tomorrow's students plan to choose a lower-charging university and 23% of parents intend to encourage their children to choose a lower charging university, according to the latest student debt research from the Association of Investment Companies (AIC).

According to the survey, 49% of students now expect to graduate with over £20,000 worth of debt and 13% think they will accumulate over £30,000 of debt.

Given the current state of the UK economy, the majority of students are even questioning whether a degree will be worth the expense, as 61% of students are worried about job opportunities when they graduate.

”With tuition fees adding to the already considerable expense of university, families are clearly looking at ways to save money,” said Annabel Brodie-Smith, communications director, AIC.

“But planning ahead could also ease the financial pain of undergraduate life. Had parents invested £50 a month in the average investment company over the last 18 years, they would now have nearly £24,000 and over 21 years that would be over £34,000.”

A separate survey of student debt found that graduates now face an average debt of £21,198 after they finish university, which will take 11 years to pay back.

The individual debt burden meant that 48% of new graduates are forced to put off buying a home, while three in ten have to delay starting a family and over a quarter (29%) put off getting married.

The survey by uSwitch.com found that 68% underestimated the amount of student debt they would incur and that one in five would now consider bankruptcy as a way to clear their debt mountain.

However, four in ten graduates don't know the rate of interest charged on their student loan and 14% had no idea what they are being charged on their overdraft.