Crippling student debt, which will take 11 years on average to clear, is forcing almost four in ten graduates (38%) to put their life on hold, according to new research from uSwitch.com. Not only are almost six in ten graduates (56%) unable to save, but other big life decisions such as getting married or starting a family, are also being put off because of student debt:
· Debt burden: graduates now face an average debt of £21,198 after they finish university, taking 11 years on average to pay back
· Putting life on hold: nearly half of graduates (48%) are forced to put off buying a home because of student debt, while three in ten (30%) have to delay starting a family and over a quarter (29%) put off getting married
· Financial reality: over two thirds of graduates (68%) underestimated the amount of student debt they would incur – one in five (21%) would now potentially consider bankruptcy as a result of their debt mountain[
· Uneducated students: four in ten (40%) graduates don’t know the rate of interest charged on their student loan and 14% have no idea what they are being charged on their overdraft.
Today’s graduates face a future blighted by student debt and poor job prospects, according to new research from uSwitch.com , the independent price comparison and switching service. Graduates now take 11 years on average to clear their student debts, but the true cost of going to university is even greater as nearly four in ten have been forced to put their life on hold because of debt.
Almost six in ten recent graduates (56%) have had to wait to start saving as a result of their student debt, while nearly half (48%) have put off buying a home. A third (33%) couldn’t afford to start a pension when they wanted to. And graduates are taking longer to achieve other life milestones because of the financial burden of university – one in three (30%) have put off starting a family, while over a quarter (29%) have put marriage plans on hold. Of those who have been forced to put life plans on hold, three in ten (29%) had to postpone their plans to start a family by at least 5 years while over a quarter (27%) put off getting by married by the same amount of time.
However, it is not that surprising that student debt is having such a huge impact on life after university – over two thirds of university leavers (68%) underestimated the amount of money they would owe after finishing their degree. And things don’t get any better after graduation. Faced with entering a job market with few prospects, the dream of walking straight into a job after graduation is no longer a reality – a quarter (25%) of graduates are unable to find even an entry level position to start their careers.
Hindered by the current state of the job market, the average graduate still has over £1,200 in overdraft as a hangover from their student days. Those that graduated between three and five years ago are still struggling to clear their overdraft of over £1,300. And when it comes to addressing the true level of their debt graduates may be burying their heads in the sand – almost a quarter (24%) have no idea how much they actually owe. Things are so bleak that one in five (21%) are contemplating bankruptcy as a solution to their debt problems.
And the future doesn’t look bright. Instead, a perfect storm is brewing as along with bleak job prospects and increasing fees, students are uneducated about the real costs of university. More than three quarters of graduates (77%) don’t think enough is being done to inform students on debt, budgeting and finance. Despite the fact that almost nine in ten (86%) graduates took out a student loan one in five (19%) wrongly believe that student loans are interest free and a further fifth (21%) have absolutely no idea how student loans are calculated or paid back.
Michael Ossei, personal finance expert at uSwitch.com <http://www.uswitch.com/> , says: “The fact that graduates have to put their life on hold because they are knee deep in student debt is a sorry state of affairs. And as fees go up, students risk running up even bigger debts. But without a degree getting a job in today’s stagnant market may be even harder. Going to university used to be the norm, but it is now becoming a catch 22.
“It is also worrying that students are going to university blind to the financial implications. Higher fees and lack of job prospects may be out of your control, but if university is right for you it’s more important than ever that you are as financially prepared as possible. Getting a student loan may be the only way to fund university, but it’s vital that you get clued up on the system. And when you graduate make sure you understand where you stand financially and how to avoid falling further into debt.”