Gina Tindale is just 22 years old, but she is already in a debt hole of £91,867 and 80 pence (to be precise). Tindale owes the Student Loans Company enough money to buy herself a Porsche 718 Cayman GTS or put down a 34 per cent deposit on the average UK home. In the last four months alone, the total amount owed has risen by £1,900 – an increase she describes bluntly as “aggressive”. Only 6 per cent of Plan 2 graduates like Tindale can afford to pay off their loans at a high-enough rate to keep up with the rising interest and actually reduce the amount owed.
The reason Tindale has such a high level of debt – made up of tuition fees and maintenance loans – she explains, is because she is from a working-class, lower-income background and her family were unable to provide financial help for her to attend university. “So, if I wanted to go, I had to take out that loan.” She was the first in her family to enter higher education.
For generations, the issue of astronomical student costs and debts has seemed like an exclusively American problem. Yes, student loans in the UK were sizeable, but nothing like what was happening across the pond. But, recent data from the Student Loans Company has shown there are now over 150,000 people in Britain who owe over £100,000. And the highest maximum individual debt? An astonishing £314,000.
Prime Minister Andy Burnham – who once promised to scrap the student loan system in favour of a simpler, more standardised graduate tax – has just hired Lucy Powell as Education Secretary. Powell has previously called student debt “endless” and “unfair”. But what will the party propose to alleviate the pressures of student debt bearing down on graduates? And what does it mean for those already burdened with these repayments?
‘It’s the working-class catch-22″
Abbi, 31, was the first in her family to go to university, where she studied medicine. She took out both tuition loans and maintenance loans at a level she says as being in the “worst bracket” where her mother was “not earning low enough to get things subsidised for free, but also not earning high enough to support me” through her studies.
Now, after seven years of training to be a doctor, and six years since qualifying, Abbi owes a hefty £108,329.37. With an annual salary of around £66,000 depending on overtime and night shifts, her repayments are set at £360 per month. “That’s half my mortgage, or [getting] a nice car on finance, or a weekend away in Europe.”
As she’s on a Plan 2 loan (for graduates who entered university between 2012 and 2023), she’ll have to make these repayments – or higher, as her salary levels up – until 30 years after graduation, when the debt will be waived. But by that point, the interest rate on her loan she calculated will mean “I’ll have paid off £200,000, but will still have £300,000 left to pay”. The British Medical Association’s Dr Callum Parr, deputy chair of the resident doctors’ committee, says that “[student loans have] created a profound feeling of burnout and disillusionment with medicine as a career”.
Chris, 32, meanwhile, felt an obligation to pursue higher education that put him over £114,000 in student debt. Attending a state school in Winchester, which he calls “a very wealthy area”, the culture there echoed Tony Blair’s 1996 speech of “education, education, education”, meaning “when you finish college, you are put on this conveyor belt to go somewhere”. His parents felt the same: “They are traditional when it comes to education.”
However, he spent his first year “really unwell and shouldn’t have gone. I just wasn’t ready.” Suffering from anorexia, he failed that year. He then began a new course at a different university, where he received “rubbish” pandemic-era remote learning before graduating. He says he felt the pressure to “get a job or do more studying”, but in the harsh post-Covid job market, he struggled. So he went back to do a master’s degree, taking on more debt.
Chris, who now earns £39,600 working for a charity, pays back £63 per month on his undergraduate loans and £83 for his master’s loans. While neither is incredibly steep, he says he was underprepared for this burden. “I didn’t really understand the whole process and the actual repercussions of taking on the loan… how it’s actually going to impact me later on.”
Abbi says the system is creating further unfairness. “I was in the working-class catch-22,” she says. “Either you never take this [loan] out, and you never earn more money than your parents, you never have the nice cars, or nice holidays, or you do take it and that’s the price you pay.” Meanwhile, Abbi’s contemporaries whose parents were able to pay upfront, “don’t have any of this. Not only did they start out with more money, they have more money now.”
Gina Tindale owes the Student Loans Company enough money to put down a 34 per cent deposit on the average UK home (Photo: Gina Tindale)“I feel let down by my choices in life”
Cameron McKay, 29, also studied for five years and has a total debt of £140,000. He also took out a loan for a two-year architecture master’s degree. Now, he earns £40,200 and pays back between £70 to £80 per month. Cameron’s attitude is relatively sanguine: “In architecture, you figure out pretty fast that the pay isn’t as good as everyone thinks it is, so you just think of [student loan repayments] as an extra bit of tax.
“It grates though, because what’s the point? It’ll never [all] be repaid, for the vast majority of people on Plan 2. It feels like it was designed for a world that never happened… [because] you don’t get the wage premium [of being a university graduate] that you used to.”
Chris is concerned about the short-sightedness of the loans system: “They want us to [save for] a pension, because we don’t know if the state pension will be viable. But my generation can’t secure ourselves because we have a [student] loan that takes a lot of the money out.”
It left Chris questioning why he ever went down this path: “It just made me feel really stupid. I feel really let down by my choices in life.”
“It’s making me consider moving to Australia”
Abbi, who is training in gynaecology, a medical specialism that she believes is best taught in the UK, is “100 per cent tempted” to move to Australia. “You work less, get paid more, get more time off and more sun.” She previously went there after qualifying, aged 26, for three years to save. “I never would have been able to afford a house if I hadn’t done those three years in Australia, there is no way on the NHS wage and the student loan repayments.”
Can the UK, a country that educated Abbi, a highly skilled medic, afford to lose her and other students like her? Cutting her student debt wouldn’t solve “all the stuff going on in the NHS”, she says, and she will still be obliged to pay off her student loan no matter where she lives. But her repayments, which she calls “a massive tax” would be much more tolerable with an improved quality of life. “If you had an achievable number to pay off, it would mean more. But because it’s just going up and up and up, it doesn’t really mean anything, does it?”
Frazer Lake, the national officer with responsibility for young members within the trade union Unite, tells The i Paper that “student debt is crushing our young people, having huge impacts on their mental health and inability to get on the property ladder”.
Rethink Repayment, a campaigning organisation set up to challenge the student loans system, has set out tangible policies for the Government. First, it wants the Government to ensure that the Plan 2 repayment thresholds are in line with earnings growth, to stop more graduates being pulled into repaying what they cannot afford.
Second, it wants the repayment rate to be lowered from 9 per cent of earnings over the threshold, to 5 per cent, as this rate is “creating significant disincentive”. Thirdly, the organisation wants a cap on interest rates, in step with the CPI rate of inflation.
‘They want us to [save for] a pension, because we don’t know if the state pension will be viable. But my generation can’t secure ourselves because we have a [student] loan that takes a lot of the money out,’ says Chris (Photo: Chris)What are the solutions?
Earlier this year, Conservative leader Kemi Badenoch – who, starting university in 2000 when fees were capped at £1,000 per year, did not need a loan – admitted “I might not have got my first flat” had she been part of this cohort of graduates.
Laura Trott, shadow Education Secretary, tells The i Paper: “Grads are mired in debt with fewer prospects than ever before. [Labour’s] decision to freeze repayment thresholds means young people are paying more, and paying it sooner, while they have fewer opportunities.” She pointed to Powell’s previous criticism of the loans, “but we don’t know what she plans to do about it”.
Trott reiterated the party’s plan to “scrap real interest on student loans. We will double apprenticeships and put an end to dead-end degrees, so young people have a real choice.”
A Government spokesperson told The i Paper: “It is important that students get real value from their investment in higher education. We are working with UCAS to make earnings and employment outcomes clear and accessible, so students can make informed choices.”
Adding that the current system was “inherited” from previous governments, the spokesperson said that steps to make it fairer include “raising the repayment threshold for the first time since 2021 and capping maximum interest rates”. The Government is also, it says, “reintroducing targeted maintenance grants to help people from all backgrounds”.
Meanwhile, the graduates continue to shell out, set to pay for their education until retirement comes into the horizon. As Tindale puts it: “Coming from a working-class background, if I do well in life and get a higher paying job, I’m the one who’s punished the most for it.”
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