We’ve found that student loans are increasing in value and have increased by an average of 10% each year due to the rate that people are paying off their debts and an increase in interest rates. As of the 2017/2018 academic year, 90% of all loans belonged to full-time undergraduate students.
The average debt among borrowers who finished their degrees in 2018 was £36,000.
Currently over £16 billion is loaned to around 1 million students every year. That’s an average of £16,000 per student.
The government expects just 30% of current full-time undergraduates to repay their loans in full.
Student loan distribution by borrower type
This graph shows how much was lent to each type of student during the 2016/2017 and 2017/2018 academic years. Not surprisingly, the vast majority of loans are taken out by full-time undergraduate students, due, mostly, to the sheer volume of them in comparison to other borrower types.
Loan amounts increased in the 2017/2018 year for all borrower types. While the amount borrowed increased by an average of 11% over the five categories from one year to the next, the highest increase was 20% for postgraduate students.
Making up over 90% of the overall loans in the two most recent academic years, full-time undergraduate students are responsible for the vast majority of student loans. The maintenance loans and fee loans that make up full-time undergraduate loans both separately make up a greater proportion of the overall loan value than loans from the remaining borrowers. Fee loans cost £8,237 million on average over the two years (61% of the overall student loan value) and maintenance loans cost £5,252 million on average over the two years (34% of the overall student loan value).
The average student loan balance in different UK countries over time
Repayments can either be made upfront by the student, or a proportion of the amount owed is taken from the student’s paycheck until the loan is paid off. The bar chart below shows the average amount owed by students in different parts of the UK when they begin their repayments.
In all four countries, the amount of debt increased over the three year period. The amount owed by each country is reflective of the number of people studying in each region.
From 2016 to 2017, the amount loaned increased by 20%, and from 2017 to 2018 the amount increased by 10%. This increase could be a result of higher student living costs as well as previously increased university fees.
The increase in the student loan value over time in the UK
Maintenance loans have increased in value over time, and while the number of loans written off remains fairly constant, interest rates are increasing at a faster rate than that at which students are paying off their debt. Therefore, the overall value of student loans is steadily increasing.
Over the five-year period, the number of loans repaid has increased at an average rate of 11% per year. At the same time, interest rates have experienced an increase at an average rate of 33% per year. This means that the value of student loans has increased by an average of 10% per year.
Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.
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