UK Graduates Face Record High Student Loan Debts as Balances Soar to Over £100,000 Pounds

New data reveals a soaring number of UK graduates now burdened with student loan debts exceeding £100,000. Figures disclosed following a freedom of information request show that by the end of June, 150,450 individuals carried outstanding student loan balances of £100,000 or more. Six months prior, that figure stood at 113,029, representing a sharp rise of a third in just half a year. One borrower reportedly owes £298,000, underlining the gravity of the debt challenge facing many young professionals.

Alongside the surge in six-figure debts, the data shows that over 2.6 million people across the UK owe £50,000 or more. The average debt for students in England finishing their courses last year has now reached £53,000, highlighting how tuition fees, rising living costs, and evolving student finance policies have contributed to this growing financial burden.

Student finance is comprised of the tuition fee loan, paid directly to universities for course fees, and the maintenance loan, intended to cover living expenses such as rent and food. Both must be repaid, often over several decades. The specifics of repayment depend on the loan plan, which is determined by factors such as where a student lived when taking out the loan and the timing of their course commencement.

There are currently five plans in the UK, with significant differences between them. For instance, graduates from England who began their degrees after 1 August 2023 are assigned to Plan 5 loans, which currently carry an interest rate of 3.2 percent and can be written off 40 years after repayments are due to begin. In contrast, Plan 2 loans, typically for earlier cohorts, are written off after 30 years. The introduction of longer repayment terms means a larger proportion of graduates may end up clearing their full loan balances.

The rise in high-balance student debt has sparked concern among financial experts. Sarah Pennells, consumer finance expert at Royal London, warns that these so-called ‘debt sentences’ are impacting graduates’ ability to save for the future, delay home ownership and undermine their financial security. A spokesperson from the Student Loans Company notes that exceptional balances often result from government policies allowing extended or repeat periods of study and special funding provisions under particular personal circumstances.

Despite the alarming figures, the Department for Education stresses that high balances are not typical for most graduates. However, student loans now require repayments from incomes exceeding £25,000 and have longer repayment periods, raising further questions about the long-term sustainability of the system and the financial impact on future generations.