Six-Figure Student Loan Debts Cripple Young Graduates‘ Financial Futures
LONDON – A growing number of UK graduates are saddled wiht student loan debts exceeding £100,000, delaying life goals and undermining financial stability, according to new analysis. The escalating debt burden, coupled with high interest rates, is pushing manny young people to the brink, impacting their ability to save, invest, or even start families.
“Six figure student loan balances aren’t just numbers on a screen, they’re delaying dreams, derailing saving plans and making it harder for young people to feel financially secure,” said Helen Pennells, a spokesperson highlighting the severity of the issue. the problem is exacerbated by interest rates on loans reaching up to 6.2 per cent, causing balances to balloon even as borrowers make regular repayments.
Graduates begin repaying their loans when their income surpasses the threshold for their repayment plan, currently ranging from £25,000 to £28,740. However, the combination of rising debt and cost-of-living pressures is creating a precarious financial situation for many.Mervyn King, former Governor of the Bank of England, recently warned that UK debt levels are ”not in a comfortable position,” adding further context to the broader economic challenges facing graduates.
The impact extends beyond immediate financial strain. Pennells emphasized that graduates are struggling to prioritize essential life milestones. “Graduates need to think about saving for a deposit, building an emergency fund, investing for the future, or even just feeling confident enough to start a family, but for graduates with six-figure loan balances hanging over them, those goals may be delayed or feel increasingly out of reach.”
Royal London is advising graduates to stay informed about their repayment plan rules and proactively adjust payments when experiencing changes in employment or income to avoid falling further into debt. recent research also indicates a lack of basic financial knowledge among university students, potentially contributing to the problem.