Students ignoring debt warnings

Wednesday, 18 January 2006 12:00

UK students are ignoring warnings about debt, and are naive about how hard it will be to pay it off, new research shows.

Online credit rating agency MyEquifax reveals that 30 per cent of students think they will clear their debts within a year, despite average graduate debt levels of £13,501.

"It is worrying that despite the average graduate starting salary being just £14,090 and the typical debt being over £13,000, a third of the students who responded to our survey believe their debts will be cleared within a year," said Neil Munroe, MyEquifax external affairs director.

"What is also a concern is that 31 per cent of the respondents anticipate that in addition to their student loan, they will only amass £500 in debt. Yet according to a survey conducted in 2005, the average student credit debt is £394 and anticipated overdraft £1,123."

Other worrying statistics revealed by the MyEquifax survey include a drop in the number of people saving before heading to university, and the fact that one student in five would consider declaring themselves bankrupt to clear their debts.

Additionally, increasing numbers of students are now turning to friends and partners for financial advice - rather than go to banks or university debt advisers. Parents remain the most trusted source of financial advice.

Students appear to be making up for this lack of funding by a combination of working (86 per cent), and money from their parents (54 per cent).

Mr Munroe concluded: "Following the recent government survey of student finances, higher education minister, Bill Rammel urged prospective students to find out and apply for financial support as early as possible. I would echo his sentiments.

"Financial planning is not something that students should put off and it is not something that should only be considered once students are at, or have left university. The earlier financial planning is started, the easier debts can be to manage."

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