1 in 3 graduates not repaying student loans

400,000 students have not made repayments on their loans up to seven years after graduation

A third of students who started university since fees were introduced in 1998 are earning too little to make repayments on their loans, ministers have admitted.

Nearly 400,000 graduates have not made repayments on their loans up to seven years after they graduated because they are not yet earning above the £15,000 threshold. It comes amid concerns that graduates now face the toughest time in a generation as firms cut down on recruitment in the credit crunch.

Students leaders are warning that the promise of cheap loans to pay for fees has all but evaporated, with the RPI, the rate of inflation, running at 4.8%.

Official figures, released in response to a parliamentary question from the Liberal Democrats, suggest that the financial return on the £20,000 debt most students graduate with is slow to arrive. Ministers claim graduates earn up to £100,000 more over their lifetime, but figures show that up to seven years after graduating a third are not yet making repayments.

Of the 1,237,300 students who still had money outstanding on loans taken out since fees were introduced, 384,300 had not begun repaying the loans at all.

Stephen Williams, the Lib Dem spokesman for universities, said: "As the financial crisis worsens the burden on new graduates is going to be even greater."

Wes Streeting, president of the National Union of Students, said that 4.8% added to loans to account for inflation made a "myth" of the promise that the loans were cheap for students. One graduate who received her annual statement last week said she had paid £650 in the last year on a £12,000 debt, but after the RPI was added had paid off only £70 of her original loan.


Polly Curtis, education editor

The GuardianTramp

Related Content

Article image
Student Loans Company overcharges graduates by £15m

Which? freedom of information request finds 57,000 ex-students waiting for a refund after overpaying their loans

Mark King

15, Dec, 2010 @11:51 AM

Article image
No 10 scraps plan to penalise early student loan repayments

Prime minister to ditch Lib Dem scheme that sought to impose charges of 5%

Barry Neild

16, Feb, 2012 @1:25 AM

Article image
Government rejects call for student loans review
MPs requested system review after inquiry revealed ‘persistent miscalculation’ of money paid out in loans that will not be repaid

Sally Weale, education correspondent

06, Nov, 2014 @1:36 PM

Article image
Student loans: hundreds of millions of pounds unaccounted for
NAO finds that the government does not have employment records for around 368,000 students and former students

Rajeev Syal and Shiv Malik

28, Nov, 2013 @12:38 AM

Student loans company boss says sorry for applications backlog

Up to 170,000 wait for news about requests for college funding

Polly Curtis, education editor

13, Sep, 2009 @10:59 PM

Article image
Warning over Wonga's 'predatory' student loans offer
Consumer Credit Counselling Service and NUS voice concerns as payday loans company aims to attract students to its 4,214% APR lending service

Hilary Osborne and Jessica Shepherd

11, Jan, 2012 @8:59 PM

Article image
Student loans payoff charge scrapped, but debt-averse could still be penalised

Graduates better off investing in an ISA than paying down loan early, says NUS leader

Jessica Shepherd, education correspondent

16, Feb, 2012 @1:13 PM

Article image
Abolition of student maintenance grant 'will hurt those most in need'
Education experts say replacement of grants with loans will deter poorer students from going to university

Sally Weale Education correspondent

01, Aug, 2016 @4:43 PM

Article image
Raise interest rates on old student loans, secret report proposes
Proposal is found in Whitehall-commissioned study examining how coalition could privatise entire stock of student loans

Aditya Chakrabortty

13, Jun, 2013 @6:17 PM

Article image
Grace is 25. Her student debt: £69,000
With graduates facing a lifetime of debt – at 6.1% interest – pressure is growing for a rethink on tuition fees and maintenance loans. But what should replace them?
• Opinion: Penalising this generation is morally whiffy

Anna Fazackerley

11, Jul, 2017 @6:14 AM