Student Loans and Student Debt

Student finance has been changing dramatically in recent years, with the introduction of fees and abolition of student grants. Student grants and student funding has been replaced with student loans, loans organised by the Student Loans Company specifically for students and paid back when you’re earning enough to cover the repayments. However graduate debt appears to be rising and more and more students are finding they have to turn to other forms of personal finance such as credit cards and personal loans to fund their academic career.

Shockingly Britain is one of the most expensive countries to study in, despite the extensive system of student support that used to be available. According to a report from the US Educational Policy Institute Britain is the third most expensive place to study after Japan and New Zealand. Coupled with information from Barclays which revealed on average students are graduating with £13,501 of debt its understandable that more students are turning to personal loans and credit cards to help them meet living costs while at university.

Possibly one of the most important factors in student debt is the rising cost of living. While students are still eligible for support in terms of student loans these often primarily go towards paying tuition fees, which are set to become variable soon. However most students do tend to go for the cheaper option of student loans before turning to other forms of personal finance. When opting for taking out additional finance 53% of those with debt borrowed from their bank and building society, on average borrowing £4,142, while 24% borrowed an average of £2,428 from parents, friends or relatives.

However it’s not all doom and gloom for students. While graduate debt is rising and there are concerns about the knock on effect when graduates wish to apply for home loans students are taking a responsible view to debt. 36% of students are concerned and focused on repaying their debt while 29% of students are concentrating on saving. Additionally mortgage lenders are aware of the unavoidable nature of student debt and seem more focused on taking on people who are able to repay their home loan, graduates after all, can be a good lending risk. There are a number of graduate and professional mortgages on the market from lenders such as HSBC and Scottish Widows targeted to those who have recently graduated with a good degree and offering a good deal.

Of course maintaining a good credit record and managing debts effectively is essential for those who wish to get on the property ladder and already have debt. Making sure a personal budget is made and stuck too is important as is reviewing your personal finance regularly. As a good credit record is built up it may be possible to get better deals on personal loans and debt consolidation could be a good way to ensure your debts are kept at a manageable level with lower interest payments.

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