VoucherCloud, the a discount voucher site in the United Kingdom, reports that fewer than 28% of recent graduates have begun to pay back their student loans. The group represents the first graduating university class in Britain that has paid up to £9,000 annually in fees.
When VoucherCloud investigated student spending and finances, they found that the median salary for the most recent group of graduates is £21,000, and only half of this cohort who immediately found full-time employment are paying back their student loan money.
Many graduates from mid-2015 are still looking for work, are working part-time, or are continuing their education. This fact means that only 3 in 10 graduates are earning enough to make their school loan payments.
In 2012, the limit on annual tuition fees was raised to £9,000, with the benchmark of salary level to begin repaying student loans lifted from £17,495 to £21,000. Students who graduated last summer were due to commence making payments in April 2016.
Of the educational institutions in the UK, 76% charge the maximum £9,000 fee. But it was announced in May that top-performing universities would be allowed to charge more. Many students could be facing loan repayments for an even longer period of years, especially if they are only able to pay part or none early in their career trajectory.
The Higher Education Statistics Agency (HESA) released data this month that showed the average salary for many social groups falls below the level that would allow paying back a student loan. The average starting salary for students in the areas of philosophy, languages, history, and media is belo £20,000 on average.
A National Union of Students report released last year found that 56% of student graduates said their degrees were not worth the £9,000 fees, and 17% stated their degrees were worth “significantly less” than the amount they paid.
VoucherCloud Head of Affiliate Operations Chris Johnson commented:
“With stats from HESA last year showing that over 60,000 graduates were working non-professional roles after they graduated – and numbers set to be similar this year – there are many students who eventually could end up paying a fraction of the total cost of their degree, putting financial pressure on them for life and resting them under a permanent cloud of debt”.
According to Aftab Ali writing for the Independent, HESA found that more than 50,000 new graduates were working in non-graduate positions, such as factory workers, crossing guards, and hospital attendants. Now, in the wake of Brexit, leading experts in Britain are questioning the benefit of expensive university degrees.
One leaked copy of a private memo showed that even government ministers were wondering if the fees at some of the UK’s most renowned universities could be warranted given the “quality and intensity of teaching.”
The government has set the repayment level at £21,000 until at least 2020, making the payment of loans even more demanding. Originally, government officials had promised to increase the threshold with inflation. This move means over two million students are paying back more than they originally signed up for when they borrowed the fee amounts.
Consumer advocate Martin Lewis, who is concerned that the tuition fee increase will impact those who formerly have not been able to afford attending university, said:
“The sooner we change the name of this finance from the misnomer of ‘student loans’ into the more realistic ‘graduate contribution’, the sooner we stop risking scaring many people who should be going to university off going to university for the wrong reasons.”