UK student loan debts soar as one graduate pays £64k in interest
The highest outstanding student debt in the UK has topped more than £250,000, figures obtained by Money show.
One student now owes £252,554 - a record high, labelled "truly alarming" by the National Union of Students, reported by Sky New.
Meanwhile, the largest cumulative repayment a graduate has made is more than £137,000, while one plan holder has accrued more than £64,000 in interest alone.
And, as of the end of September, more than 2.2 million people had an outstanding loan balance of more than £50,000.
It comes 12 years after student loans were tripled in the UK, rising from £3,000 a year to £9,000 under David Cameron’s coalition government. The purpose of this was to compensate for an 80% cut to higher education teaching budgets, made at a time when the country was enacting austerity measures to recover from the financial crisis of 2008.
Last month, the new Labour government announced it was reversing the 2017 tuition fee freeze, and from next year it will cost £9,535 a year.
Figures seen by Money show that in the past five years, just 5.8% of student loan balances have been paid off in full - and many students, particularly those who owe some of the highest amounts, will never be able to be fully debt-free before the loan is wiped (this happens depending on plan type, but it is usually between 30 and 40 years after graduating).
The highest amount a graduate has repaid is now almost £138,000.
Loan Plan 1 is for graduates who attended university before the tuition fee rises (before 2012). Fees tripled for those on Plan 2, which is why they top the tables for the amount owed and interest outstanding.
The Student Loan Company (SLC) can also charge non-compliance interest - usually up to 3% - and is applied to balances where a graduate fails to respond to requests for information, loses touch with the SLC or doesn’t keep their contact address and employment information up to date.
As of the end of September, the highest amount applied to a single balance was £18,300.
How does someone accumulate so much debt?
The SLC was keen to stress that some of the highest balances outlined above are simply "not the norm".
For those who owe the highest amounts, some may have taken out several student loan products (so they may have started several courses, taking out multiple loans) or have taken courses that run up to six years in length (for subjects such as medicine, dentistry or veterinary science).
The SLC said: "On average, graduates leave study with a debit balance of £48,470 in England.
"These exceptional balances are a function of government policy that in certain circumstances exempts specific courses from repeat study restrictions, permits funding for additional years of study, and results in SLC awarding additional years of funding when an individual demonstrates compelling personal reasons."
Nick Hillman was a special adviser to the government at the time the new tuition fees were introduced and is now director of the Higher Education Policy Institute.
He told Money: "At the time we did not imagine someone could have accumulated debts of this level."
Even taking out the maximum tuition fee loan and the maximum maintenance loan (now £13,000 for someone living in London, not with parents) he said it is difficult to understand how a single person could have racked up £250,000 in debt in just over a decade.
"I am struggling to understand it," he said. "I want the student loan model to reclaim public confidence, but these outliers suggest it certainly is not working at the margins."
With millions now owing more than £50,000 (including interest), it suggests that while £250,000 in debt may be unusual, eyewateringly high debt is not.
Nick said the model generally works: "But my biggest worry is I want people to have faith in the way we are funding students and universities."
’Truly alarming’
Alex Stanley, vice president for higher education at the National Union of Students, said the figures were "truly alarming and demonstrate how unsustainable the current situation is".
A recent housing survey by the union found one-third of students were struggling to pay housing costs, with 17% resorting to food banks.
"Not only do student loans fail to provide students with the quality of life they deserve, but they must suffer a debt burden which threatens to curtail their ambitions, too," Mr Stanley said.
"This is a growing crisis that threatens the future of higher education and the financial well-being of countless people whose only crime was to want to better themselves.
"The government must commission an urgent review of student finance and higher education funding. We must explore sustainable solutions that ensure access to education without the crushing weight of debt. It is imperative that we create a system that supports students, rather than one that leaves them struggling for decades."
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