With the financially crippling impact of student debt long been known of, and measures routinely suggested from governments and universities to lessen the load, it seems hard in some respects to believe that the amount of debt people are graduating with is actually on the sharp incline, but there are several reasons that could explain why this well documented problem has been allowed to worsen over the years. 

Rising interest rates and inflation 

From September 2017, interest on student loans taken out in England was raised to 6.1%. This equates to an additional cost of £5,800 for the average undergraduate. Student loans were once famed for their low-interest rates, having been historically tied to retail price inflation (RPI) or the Bank of England base rate plus 1%, but with RPI erratic since the Brexit vote and inflation on the up, it’s fair to say students have been really feeling the pinch. 

The fall of the pound following the Brexit vote hit hard and it has been largely floundering ever since. This is what caused the significant surge we’ve seen in the UK’s rate of inflation, and since student loans are calculated in part using this figure, it has meant that students are once again the ones out of pocket and paying a hefty price. 

Increased tuition fees 

Back in June, news broke that the country’s total outstanding student debt had topped £100bn for the first time in history, proving unequivocally that the problem is indeed increasing over time, and backing up calls for reform with regards to the way loans are managed. In the financial year ending just 4 years earlier on the 31 March 2012, this figure had been around half that. It seems there is little room for coincidence therefore that it was this same year, 2012, that saw new rules introduced that allow universities in England to charge as much as £9,000 per year for tuition fees, which means people are now paying far more than ever before, without even factoring in the rising cost of living they also have to contend with. 

Around the same time that the £100bn figure was revealed, Labour made big gains in the General Election, and this was due in large part to a big turnout and high support for the party amongst 18-24-year-olds. Again, it seems unlikely to be a coincidence that this is the typical age bracket for students, and that Labour had previously pledged to try and scrap tuition fees if they had won, proving with little doubt that financial worry for the future is one of the major social and political issues concerning and influencing young people today. 

An inability to pay it back 

The rate of outstanding debt could perhaps look so high because so many people are simply left unable to ever pay it back. In England, student loan repayments are calculated at 9% of everything earned above £21,000, until 30 years after their graduation, at which point anything left is simply wiped off. Accounting for poor ‘real wages’, pay rises are simply not keeping up with the rate of inflation and are thus leaving people worse off than before, meaning many have little to no chance of ever actually paying off their debts.