Student debt is closing options

Graduates are finding it increasingly difficult to get the mortgage they want because of student debt repayments, it was claimed this week, writes Alan Thomson.

Mortgage lenders, including the Halifax, Woolwich and Cheltenham and Gloucester, deduct annual student loan repayments from the applicant's salary before determining how much that person can borrow.

The problem was highlighted by Liberal Democrat peer Baroness Walmsley in a debate in the House of Lords last week. Lady Walmsley urged the restoration of means-tested grants and the abolition of undergraduate tuition fees.

She said: "Some calculate an average total of £12,000 worth of debt for each graduate... It affects their ability to establish themselves in the world of work and home ownership."

A spokeswoman for the Liberal Democrats said that graduates were worried about their ability to get a mortgage, a fact borne out by the growing number of letters sent by constituents to their Liberal Democrat MPs.

A spokesman for the Department of Education and Employment said that they understood mortgage lenders treated outstanding loans in the same way as other debts.

It also emerged that some undergraduates are so poor that they are receiving church food parcels. The Bishop of Hereford told peers that undergraduates were receiving food parcels organised by university chaplains, local churches and branches of the Mother's Union.

He said: "Should we be content with, let alone proud of, a system that requires that kind of emergency charitable support?"