Graduates will be paying well into their fifties

Under new system, average repayments will double, IFS finds

April 10, 2014

Nearly three-quarters of graduates will never repay their student loans in full and will still be paying off their debts in their fifties, the Institute for Fiscal Studies has said, prompting calls from an influential social mobility group for a rethink of the new system.

An IFS report for the Sutton Trust, titled Payback Time? and published on 10 April, says that under the new system 73 per cent of all graduates will not have repaid their debt in full by the end of the repayment period, compared with 32 per cent under the old system.

Conor Ryan, director of research and communications at the Sutton Trust, said that “for many professionals, such as teachers, this will mean having to find up to £2,500 extra a year to service loans at a time when their children are still at school and family and mortgage costs are at their most pressing”.

He added: “We believe that the government needs to look again at fees, loans and teaching grants to get a fairer balance.”

The research – by Claire Crawford and Wenchao Jin of the IFS – says: “In cash terms, we estimate that, on average, graduates will now repay a total of £66,897.” This is more than twice the £32,917 they would have repaid under the pre-2012 system.

The researchers say that a typical teacher (who earns the average earnings among teachers at each age) will still owe about £37,000, in 2014 prices, at the age of 40 and will be expected to repay £1,700-£2,500 “more per year in 2014 prices during their 40s and early 50s under the new system than under the old”.

The IFS says that the extra costs of the new system amount to “around an additional £1,090 per year on average between ages 41 and 51 in 2014 prices”. And it adds: “This may make it more difficult for affected individuals to meet ongoing expenses over this period.”

Figures released in response to a written question from Liam Byrne, the shadow universities, science and skills minister, show that the government estimates that 60 per cent of graduates under the post-2012 loan system will have some or all of their loan written off, up from 40 per cent under the pre-2012 system.

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Reader's comments (1)

An earlier article said that a graduate will earn £200,000 which, accepting the data and the argument above, still leaves them better off, albeit over a long time, than if they don't graduate It is arguable that this story will turn young students away from Higher Education because it could be seen as promoting a belief that they can't afford it.


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