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Average student debt repayment will take over 12 years

16/06/2009

Callcredit research shows 44pc of 18 – 24s are not saving at all.

Key statistics

• 44pc of young people aged 18 – 24 are not saving any money at all
• 64pc are more concerned about their financial situation today than in April 2008
• 8pc of 18 – 24s spend over 50pc of salary on unsecured debt
• It would take over 12 years to pay off the average student loan on the average graduate salary

As students across the country come to the end of their courses, analysis by online credit report provider Callcredit Check shows that the average student debt will take over 12 years to repay. YouGov research commissioned by Callcredit has also shown that 44pc of young people aged 18 – 24 are not saving any money at all and 64pc are more concerned about their financial situation today than in April 2008.

As the average student debt is £15,700 and the average student starting salary is £22,300, the monthly repayments for a graduate with this debt would start at £54.00 a month and would take up to 12 years to repay taking into account an annual average wage increase of 4.6 percent. Whilst of course inflationary, interest rate, salary and bonus changes affect the size and rate of repayments, this demonstrates what a tough financial environment students are graduating into.

YouGov research commissioned by Callcredit compounds this, showing that 44pc of young people aged 18 – 24 are not saving any money at all and 64pc are more concerned about their financial situation today than in April 2008. A significant minority of 8pc of 18 – 24s spend over 50pc of salary on unsecured debt.

Owen Roberts, head of credit report provider www.callcreditcheck.com comments, “Managing your finances as a student or a new graduate can be a tough. As a graduate in particular, trying to balance what may be a relatively low income with high debt levels, rent and other costs of living can prove very tricky. Crucially, it’s at this time of life you may start to see the impact of your credit history, as lenders will use it to decide whether to lend to you and at what rate. While each lender has different criteria, key to working up a good credit score is showing a consistent ability to service your debt levels, so paying phone bills, rent, credit cards, student loans etc on time is important if you’re looking to secure the most competitive deals.”

Research information

Research from YouGov Plc: total sample size was 2030 adults. Fieldwork was undertaken between 3rd - 6th April 2009. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

Other sources: Student Debt and starting salary information taken from The UK Graduate Careers Survey 2009, conducted by the student & graduate market research company, High Fliers Research Ltd. Information is based on face-to-face interviews with 16,357 final year students completed in March 2009. This sample equates to a fifth of the finalists due to graduate this year from the thirty universities included in the 2009 survey.

Information on repayment of student loans from the Student Loans Company - www.slc.co.uk

The average salary increase data taken from the Office for National Statistics report here http://www.statistics.gov.uk/cci/nugget.asp?id=285

Calculations

Based on repayment thresholds from the Student Loans Company.

Year	Salary (increases by 4.6pc each year) in £	Salary -£15000 (threshold for 9pc loan charge)	9pc of (salary - £15000)
1	22300	7300	657
2	23325	8325	749.25
3	24398	9398	845.82
4	25521	10521	946.89
5	26695	11695	1052.55
6	27992	12992	1169.28
7	29207	14207	1278.63
8	30550	15550	1399.5
9	31956	16956	1526.04
10	33426	18426	1658.34
11	34963	19963	1796.67
12	36572	21572	1941.48
		Total loan paid back	15021.45

About Callcredit Check

• Callcredit Check is the consumer arm of credit reference agency Callcredit, providing consumers with instant online access to their credit report and services to help them monitor their credit status. www.callcreditcheck.com

• Callcredit is the UK’s most innovative and customer-focused Credit Reference Agency, with an established reputation for service differentiation; focusing on listening to clients and creating innovative solutions that deliver real business value. Find out more at www.callcredit.co.uk

• Callcredit is one of six core businesses that form the Callcredit Information Group (CIG). CIG brings together experts across the fields of credit referencing, marketing services, interactive solutions and consultative analytics to enable our client base of businesses and consumers to make informed decisions using our innovative products and services. www.callcreditgroup.com

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