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For immediate release: 6th April, 2006
STUDENT LOANS, HIGH BORROWINGS AND LACK OF JOBS SEND LONDON GRADUATES INTO DOWNWARD SPIRAL TOWARDS INSOLVENCY
Thomas Charles and Accommodation for Students research unearths parlous state of recent students’ finances, borough by borough.
- 42% of recent graduates in London have unsecured debts of £10,000 and over
- 58% say that over half of their debt is due to a student loan
- One third believe there is a likelihood they will become insolvent
- Southwark, Islington and Camden home to graduates with highest debt
- Westminster borough with highest insolvency likelihood among recent graduates 32% of graduates have found it difficult or very difficult to find a suitable job
(London, 6/4/06) Thomas Charles (www.thomascharles.com), the leading debt solutions consultancy, and Accommodation for Students, the UK’s No 1 student accommodation website, have carried out research among 1000 recent graduates in London to measure the impact of student loans on their current debt situation and assess the potential threat to them of personal insolvency. The survey was carried out across 32 boroughs in London. 90% of the graduates were under 30 and 80% had graduated in the last 2 years.
Debt Levels and Student Loan Legacy
42% of respondents have unsecured debts of over £10,000, 10% owing more than £20,000. 71% have at least one credit card and 33% a personal loan. Less than a third of all surveyed (30%) believe they will pay off their current debts within a year and nearly a half (48%) believe it will take upwards of three years.
58% of recent graduates attributed more than half their current debt to their student loan. Only a quarter regretted taking out a loan but 60% blamed their student loan for their current debt situation. Southwark, Islington and Camden host graduates with the highest level of debt, with Westminster, Hackney and Greenwich not far behind.
Concern about Personal Insolvency
A third of graduates interviewed are having problems meeting the repayment requirements on their debts. 12% believe it likely or very likely that they will never be able to repay their debts whilst a further 22% think it quite likely that they will become insolvent. Westminster, Lewisham, Ealing, Harrow, and Haringey are home to graduates with the highest expectations of insolvency.
James Falla, Director of Thomas Charles, commented:
“This latest research shows the impact of student debt legacy and how quickly matters can worsen even when they get a job. Even though many students may go on to earn a good salary, in the world of work their money does not stretch as far as they thought it might. They find themselves living and working with others who are themselves earning good salaries with high cost lifestyles. Trying to keep up with these lifestyle expectations, combined with existing student borrowings, means that many graduates just get further in debt, often to a critical extent. Many of our younger clients at Thomas Charles clearly fall into this category.”
Finally, a concerning 52% of graduates say that it has been difficult or very difficult to find a job within their area of study. Graduates living in Westminster, Camden, Southwark, Hackney, Lewisham, and Brent have found it particularly difficult to find a suitable job.
The research surely indicates the beginning of a long term trend: initiated by the need to borrow money to support higher education; fuelled by easy access to borrowing via credit cards and personal loans; finally culminating in dire consequences when suitable employment is difficult to find and therefore insufficient income is forthcoming to finance debt repayment.
Suggesting that all the blame is not on the borrower’s side, nearly two-thirds of graduates interviewed, 63%, said they thought banks and credit card companies lend money in an irresponsible manner, a view interestingly reflected in the recent decision of the Banking Code Standards Board to strengthen the Banking Code to encourage more responsible lending.
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