IVA & Debt Consolidation Advice

The amount of money students borrow to finance their education is three times higher than it was a decade ago. It has reached an alarming £18 billion and is likely to soar even higher with the new £3,000 annual top-up tuition fees. Depending upon your course of study, these fees can push the estimated cost of obtaining a degree to more than £33,500.

According to figures submitted by Student Loans Company, during the last financial year, new student loans totalled more than £3 billion, a remarkable increase over the £941 million they borrowed in 1997. Of that amount, almost £400 million was required in order to cover £3,000 annual fees, the amount that most universities charge. The total amount due on student loans from both graduates still paying on their loans and current undergraduates is £18.125 billion. Critics of top-up fees claim that they are putting an additional financial burden on students.

The National Union of Students believes that this fee could increase typical graduate debt to £30,000. The government, on the other hand, estimates that debt could rise from the current £8,500 to £15,000. This estimate only takes into consideration debt that is owed to the Treasury where loans to students are subsidized and students pay zero interest rates. In 1997, the average student debt was under £5,000.

Students are allowed to borrow £7,405 each year from the Student Loans Company. This includes a £3,000 tuition fee loan and a £4,405 loan for living expenses. Many students supplement their Government loans with overdrafts or by taking loans on their credit cards.

Last autumn tuition fee reforms raised student fees from the previous £1,175 a year. Students are not required to pay the fees at the start of their courses and can wait until they earn £15,000 before they repay zero-interest rate loans they take to cover the charges.

Education spokesperson Sarah Teather commented that the total student debt is higher than gross domestic product of Slovenia. However, Higher Education Minister Bill Rammell said that student loans are the safest and most effective means for students to finance their education. He goes on to say that students are borrowing only the amounts to which they are entitled and are not going beyond their means.