Student debt falls in 2007

Debts for older people are increasing, but research by NatWest has shown that the average student debt at the time of graduation has come down for the first time in seven years.

It may go against popular thinking to see that older generations are struggling with debt than youngsters (aren’t parents supposed to be lending to their children to help them through university?) – NatWest’s figures show an improving situation for graduates.

According to the research, the average student debt this year is £12,263, and that’s a fall of £886 or 6% on 2006. One surmised reason is that more students are getting jobs during term time to help with the expenses of life at university. Around 50% work to help pay for their studies and more than four out of five due to start university this September say they will look for paid employment.

Nevertheless, however encouraging the figures appear, student debt remains high. Recently a report has shown that the average debt is £7,500 with a third of students having debts of over £10,000 – in student loans, credit cards and overdrafts. Top-up fees introduced in 2006 are now £3,000, and these will see that student debt will rise again when students graduate in 2009. The estimated figure for that year is £22,000.

The result of that is that young graduates will be paying off loans for more than a decade after they’ve completed their education, and undoubtedly more will be forced into bankruptcy.

Many students try to cover their debts by working while at university, but of course they are trying to study as well. It can mean their weekends are taken up behind check-out desks in local supermarkets, or behind the bar in the local pub. Debt has become a way of life for students and graduates, and the increased fees will mean that future generations of students will be worse off, with credit cards and loans helping them to manage.