Graduate debt ‘higher in England than in US’

Sutton Trust report warns that finding is ‘cause for concern’

April 28, 2016
Car covered in heavy baggage
Source: Reuters
Heavy baggage: ‘that English students now face the highest average debts at graduation should be cause for concern’

English graduates face higher debts than their counterparts in the US, Australia, Canada, New Zealand and the rest of the UK, according to a Sutton Trust report.

The organisation, which aims to promote social mobility through education, says that US graduates leave with typical debts ranging between £19,100 and £29,100 depending on the type of institution that they attended. Meanwhile, typical English graduate debt under the £9,000 fees system is £44,500, it says.

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

It also says that English graduates face a higher ratio of debt to average starting salaries than their counterparts in other nations.

However, the report points out that the “centralised, state-run repayment system in England and other UK countries is relatively advantageous for the borrower”.

The report – which looks at graduate debt in the UK, the US, Canada, Australia and New Zealand – recommends that MPs on the Business, Innovation and Skills Committee monitor higher education funding and impacts on poorer students.

It also calls for greater coordination on higher education policy between the UK governments given “complexity and variance” under devolution; for the Office for Budget Responsibility to “investigate whether the current student loans system offers value for money to both the student and taxpayer, especially given recent reforms”; and for universities to spend at least 10 per cent of outreach budgets on evaluating which strategies work best in widening participation.

Sir Peter Lampl, chairman of the Sutton Trust, says in his foreword to the report that “young people in England are still leaving university with ever increasing debts, especially now that maintenance grants are to be scrapped in favour of loans and the repayment threshold is to be frozen.

“The poorest students will again be hit hard – they will in future graduate with over £50,000 of debt, compounded by interest rates of up to 3 per cent above inflation.”

The £44,500 figure for typical English graduate debt cited by the Sutton Trust comes from 2014 research by the Institute for Fiscal Studies.

But the report places this in the context of figures on graduate debt across other “anglophone” nations.

"US institutions often award more generous scholarships, grants and bursaries than their UK counterparts," it notes in terms of explanation for the former’s lower graduate debt.

The report notes that it is important to consider levels of graduate debt in the context of typical earnings for graduates in different nations, as well as to look at the structure of debt and whether it is held by the government and repaid via income-contingent loans or by banks (the report cites figures showing that 17 per cent of US graduate debt for the class of 2014 came from private loans).

john.morgan@tesglobal.com

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