Half of first-year university students are concerned about debt
September 20, 2013
As the initial trimester of university gets underway for a new batch of first-year students, a range of recent research has shown that even school-leavers are beginning to worry about debt.
A survey from Lloyds TSB discovered that in the last academic year, around one in five students struggled with their finances, failing to make ends meet each month. Just less than half (40 per cent) of students studying at university were just meeting the monthly cost of living.
The figures were representative of the UK as a whole, and the situation may differ for Scottish students, who are entitled to free tuition fees when studying in Scotland. However, since student grants are no longer available, even Scottish students are forced to rely heavily on student loans as a main source of income during their course.
The average student debt for English students is estimated at around £43,500, according to findings from financial awareness charity, Credit Action. In Northern Ireland, Scotland and Wales, students can expect to accumulate an average student debt of between £22,000 and £25,000 when studying in their country of residence.
Chief executive offer of Credit Action, Michelle Highman, supports the idea of university, butargues that students need to be more aware of what they’re signing up for. She said: “A degree is a fantastic investment, which can pay for itself in a number of ways including higher salaries and increased opportunities, but we want all students to be able to make a balanced decision about how much student loans may cost them, and to be aware of interest charges and repayments.”
Another batch of research carried out earlier this year reinforces claims that students are unaware of the interest rates that are charged on the loans after they have completed their course. Dr Mike Clugston, a teacher in Kent who conducted the research for the Mail on Sunday, said: “I asked 160 pupils what the new tuition fees cap was and they all chorused £9,000 a year. But when I asked about the rate that would be applied to these loans, not one could tell me what it was.”
Findings from the survey claim that 85 per cent of students will never be able to repay their student debt and a large proportion will struggle to buy their own home as a result.
The interest rate for students who began university before the £9,000 per year tuition fee increase stood at 1.5 per cent. At the time of the research earlier this year, the interest rate with which today’s students will be burdened, is now 6.3 per cent. This figure will also increase according to inflation.
If you’re struggling to cope with the cost of living due to any kind of loan, contact Scotland Debt Solutions today and our dedicated advisers will do our best to work out the best possible solution to help keep your finances under control.
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