Almost half of graduates fear being saddled with student loan debt for life

ALMOST half of recent graduates believe they will never be able to pay back their student loan, as experts warn that they would be better off without university.

A report commissioned by the new universities regulator, The Office for Students, analysed the views of 6,000 young people about value for money in higher education.

Just 10 per cent of school leavers thought they would be unable to pay back their loan within 30 years, which rose to 28 per cent of university students. Among recent graduates, 42 per cent said they do not expect to repay their loans in full.

Nick Hillman, the director of the Higher Education Policy Institute, said it is “telling” that the proportion of youngsters who believe they will never earn enough to pay back their student loan rises sharply after they graduate.

“It reflects the fact that people on their way to university are rather naive and badly informed about higher education,” he said.

“We need to do a much better job of explaining the finances and everything about university life to school leavers.”

Prof John Jerrim, from University College London’s Institute of Education, said that most teenagers tend to overestimate their future salary when deciding whether or not to go to university.

“The truth is, a significant proportion of young people who go to university will not earn what they expect, and hence not be able to fully pay back their loan,” he said.

“Some young people may as well go straight into the labour market instead. With pressure on higher education funding, I think a proper conversation is needed on how many should be going.”

Last month Theresa May, the Prime Minister, announced a review of tertiary education and university funding, as she attacked Britain’s “outdated attitude” to university education, saying too many people take degrees and are charged too much for their courses.

She admitted that the current system of tuition fees was not working.

Dr Joanna Williams, a senior lecturer in higher education at Kent University, said that the most damaging type of “misinformation” for teenagers is that going to university will lead to a better job or add a “graduate premium” to a salary.

“That is all very well if you do Economics at the London School of Economics (LSE), but if you do a different degree at a less prestigious university, you can earn less than if you hadn’t borrowed in the first place and just gone straight into work,” she said.

A report by the Institute of Fiscal Studies (IFS) last year warned that almost eight in 10 graduates will never pay back their full student loan under the new tuition fees system.

The IFS said its research showed that most graduates will still be paying off student loans into their 50s.