English students have highest debt in Anglophone world

English students in universities in England now face some of the highest tuition fees in the world – higher than in the United States, Canada, Australia and New Zealand – and the highest average debts at graduation, according to a new study.

The typical English student faces debts of over £44,000 (US$64,500) at graduation. Even compared with graduates of US private for-profit universities – who graduate with about £29,000 of debt – estimates suggest that English students fare worst, the study, Degrees of Debt, published by the Sutton Trust says.

Partly due to generous scholarships, the average graduate of private non-profit US universities, which include the Ivy League, finishes with £23,000 of debt despite the typical course lasting four years compared to three in England.

However, the vast majority of English students’ study-related debt is held by the state, which has relatively clear repayment conditions compared to other Anglophone countries and the system is income-contingent.

The UK graduates do have to pay interest rates of up to 3%.

However, in the US, only a minority of students are repaying loans under income contingent arrangements, and they face even higher interest rates.

While UK and Australian graduates can take a ‘repayment holiday’ when their income dips, only 19% of US students receiving the most common federal loans are enrolled on similar schemes.

“Despite this, the fact that English students now face some of the highest tuition fees in the world should be cause for concern,” the Sutton Trust says, “not least because the number of part-time and mature students enrolling at UK institutions across recent years has dropped precipitously.”

“While full-time undergraduate university enrolment has recovered since the imposition of £9,000 fees in 2012, university needs to remain a viable option for everyone, especially those from poorer backgrounds, who are disproportionately underrepresented across the UK professional landscape,” the Trust argues.

The Sutton Trust is concerned that the abolition of maintenance grants this September – which were reintroduced when tuition fees rose from £1,175, depending on income, to £3,000 in 2006 – will leave the poorest students with debts in excess of £50,000.

This will save the government £1.6 billion.

The government has also decided to freeze the threshold at which graduates start repaying loans, at £21,000, which will accelerate the rate at which students pay back loans resulting in higher monthly payments.

Tuition fees in England are higher, at an average of £8,800 (with a cap at £9,000), than for students going to a home state public university in the US (about £6,600).

Fees for students out-of-state and at private universities are often higher in the US, but many have generous bursary schemes that offset fees for low- and middle-income families.

The study recommends that the parliamentary select committee for Business, Innovation and Skills should monitor higher education funding, especially its effect on disadvantaged pupils, including mature and part-time students whose enrolment rates have dropped significantly in recent years.

It says there needs to be greater coordination between the governments of England, Scotland, Wales and Northern Ireland on higher education policy, given its complexity and variance, fostered by regular meetings between representatives of the four countries.

It says the Office for Budget Responsibility should investigate whether the current student loan system offers value for money to both the student and taxpayer, especially given recent reforms announced in the 2015 budget and spending review.

And it recommends that universities should spend at least 10% of their outreach budget on evaluating strategies that work best in widening participation.

Highest debt levels

Sir Peter Lampl, chairman of the Sutton Trust and Education Endowment Foundation, said: “The massive increase in tuition fees from just over £3,000 to £9,000 per annum [in 2012] and the abolition of the maintenance grant results in the poorest English university graduates facing debts on graduation of over £50,000 with interest rates on the debt compounding at up to 3% over inflation.

“These debt levels are by far the highest in the English-speaking world and are more than double average debt levels at universities in the United States, where students study for four-year programmes, rather than three. They impact on the ability of graduates to go to graduate schools, to afford a mortgage, the timing of having children and other major life decisions.”

He said the cost of going to university has become so expensive that more young people should seriously consider higher level apprenticeships, preferably to degree level.

“By choosing this route they will earn while they learn, incur less debt, and develop skills which are greatly valued in the workplace. We need more good apprenticeships to offer genuine alternatives to university degrees.”

’Soaring debts’

The University and Colleges Union, or UCU, has called on the government to urgently review England’s student finance system in the light of the Sutton Trust’s findings.

UCU said that soaring debts risk putting talented students off going to university in the UK, and echoed the report's concerns about the impact of rising debt on part-time and mature students.

UCU General Secretary Sally Hunt said: 'It is deeply concerning that our student finance system leaves English graduates with significantly higher levels of debt than other large English-speaking countries. It is a system which weighs heaviest on the poorest students and which is clearly not working for part-time and mature students, whose numbers have dropped massively in recent years.

“The current debt levels risk putting too many talented students off higher education; we need the government to urgently review the way that students are funded, and put in place a secure, sustainable system which works for everyone, regardless of their circumstances.”