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For immediate release: 15th February 2006
LATEST RESEARCH CONFIRMS SCALE OF STUDENT DEBT HAS GROWN IN LAST TWO YEARS
- Thomas Charles and Accommodation for Students survey reveals worrying trend -
Thomas Charles (www.thomascharles.com), the leading debt solutions consultancy, has carried out a key piece of research which clearly shows that the student debt situation is getting worse for today’s students. In conjunction with the UK’s No 1 student accommodation website, Accommodation for Students (www.accommodationforstudents.com), the company has surveyed more than 700 current students and 600 recent ex-students to establish the scale of their debt problems
The survey shows that 38% of ex-students who left university in the last 2/3 years had a total debt legacy of between £5000 and £20,000 plus. Amongst current students, the figure in debt to this amount is significantly higher, at 45%. Furthermore, when asked the question ‘How much do you expect your total debt to be when you leave university?’ a worrying 62% of current students put their final debt in this range. 14% of ex-students left recently with debts of £10,000 to £15,000. Double that number of current students, 28%, expect to leave with debts of the same amount.
In terms of total debt only 27% of students currently owe nothing. 11% owe up to £1000, 17% between £1000 and £5000, 21% between £5000 and £10000, 17% between £10000 and £15000, and 7% more than £15000.
The largest component is, of course, a student loan where the amounts are prodigious. The research shows that 14% of students took loans of between £5000 and £10,000, and 20% between £10,000 and £20,000. 30% have loans of less than £5000. Only 33% of students have no loan at all.
Borrowing is not confined to student loans. 64% of students also have an overdraft, nearly a half (44%) owing more than £700. Most too have credit cards – 57%. 62% of students pay off their cards but 15% owe between £500 and £5000.
In terms of how long it will take to pay off their debts, 25% of students think it will take 1-5 years, 22% think 6-10 years and 16% 11-15 years. Ex-students are more optimistic. 34% expect to pay off their unsecured borrowings in 1-5 years, 13% in 6-10 years and only 7% in 11-15 years.
James Falla, Managing Director of Thomas Charles, commented:
“For most prospective students nowadays the financial considerations are as important as the choice of syllabus or university. Tuition fees and other costs often mean that taking out a student loan is a must. Currently only a third of students don’t have a loan. Given this scenario many are questioning whether it is worth going on to higher education at all. This latest research shows that the student debt legacy is growing. Nearly two-thirds of students will leave with debts of over £5000, many up to and beyond £20,000. Even though they go on to earn a salary, their lifestyle expectations and expenditure, combined with their existing borrowings, means that many just get further in debt, often to a critical extent. Many of our younger clients at Thomas Charles clearly fall into this category.”
Students also appear to be worse affected, health-wise. The research revealed that 34% of students said that debt had adversely affected their health or well-being, compared to just 26% of ex-students. Loss of sleep and depression were the two most commonly stated symptoms.
There is other evidence that being in debt can cause serious physical and psychological problems: becoming withdrawn and alienated from society, depression and even suicide. Much has been written recently about the so-called Money Sickness Syndrome, with 45% of adults claiming to worry about their finances. Falla comments:
“It is worrying to think that people so young are being adversely affected by debt. The notion of carefree students seems to be far from the truth. We take the human element of our business very seriously indeed. We get to know our clients problems in depth and effectively become their confidantes and trusted partners in seeking a solution to their financial problems that most believed wasn’t possible when they first came to us.”
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