The £15k debt facing every Mersey student

Sep 15 2007 EXCLUSIVE By David Higgerson, Liverpool Daily Post

STUDENTS at Merseyside’s  universities will graduate with  an average debt of £15,000, with  many expecting to owe more  than £20,000, the Daily Post can reveal today.

The level of debt students in the  region expect to accrue this year  has risen by a quarter compared  with  last year.

Experts say it is largely down to  the introduction of top-up fees  which give universities the power  to charge more for certain courses  – up to £3,000 a year. And because  the area’s universities have  unusually high intakes of people  living locally, economic experts  fear rising graduate debt could  damage the housing market in  Merseyside in years to come.

Many students are having to  borrow on average £50 a week just  to get by, as well as putting in long  hours in part-time jobs.

As universities prepare to  return to class after the summer  break this week, student bodies  are warning top-up fees and a  rapidly-rising cost of living would  deter many students from going to  university in the future.

They say it could also force  those who do graduate into quick- to-find, but lower-paid, jobs so  they could start clearing debt.

Figures just published show  students attending Liverpool  University will, on average, add  £4,730 to their debt over this  academic year.   Steady inflation  would mean, after three years,  that debt equating to £16,000.

Chester University was not far  behind at £4,646 of debt accrued  over the next 12 months. Projected  three-year debt is around the  £14,300 mark.

Students at John Moores  University expect to add £3,421 to  their debt burden this year. The  city’s third university, Hope, has  students expecting to add £3,616 to  their overdrafts, credit cards and  student loans over the next 12  months. Once potential inflation  is taken into account, the average  debt will be above £13,000 over  three years.

The highest figures  for the region were from Edge Hill  University, with campuses in  Ormskirk and Liverpool, where  students expect to add more than  £6,000 to their debt levels this  year, taking three years of debt to  over £18,000.

Government figures suggest the  average annual debt for students  in 1998, after savings had been  taken into account, was just £850.

Overall, that means the  combined debt of all the  undergraduates studying at  universities in Cheshire,  Merseyside and West Lancashire  by the time they leave will be  almost £500m.

Liverpool City Council surveys  of high school students suggest  their biggest fear about university  was debt.

National Union of Students  President Gemma Tumelty said  “These figures show  unequivocally that graduate debt  is increasing because of the  introduction of top-up fees.

“Creating a student funding  package that doesn’t cripple  students once they graduate isn't rocket science.

“The current student funding  system means that graduates are  hit with debt just as they are at  their most vulnerable.

“Graduates face huge levels of debt and with that comes stark choices about whether they can afford to volunteer to raise their skill set, hold on for that ideal job, or add further qualifications. In many cases debt denies them any real choice at all.

“It is great to see numbers  entering higher education are  buoyant but the influence that  rising debt has on students’  choices and the hours that  they will need to dedicate to  low-paid part-time work, as  well as their chances of saving,   volunteering and retraining as  graduates are  issues that need  to be reconciled.”

Chris Rhodes, director of  retail banking at Alliance &  Leicester, which has a large  presence in Liverpool, said the  effects of student debt were most  likely to hit people in their late  20s, and impact the housing market as a result.

He said: “The picture for the  under-30s is dominated by student  loans. A hangover of student debt  is constraining their appetite for  other borrowing and delaying  their ability to get on the housing  ladder.”

Walton MP Peter Kilfoyle said:  “I voted against top-up fees  because I could see this coming.

“A whole generation is now in  debt and that is economically  unsustainable for this country.”

The Liberal Democrats are now calling on banks to stop making getting into debt so easy, with many students holding large overdrafts with more than one bank.

Vincent Cable, shadow chancellor for the Liberal Democrats, said: “Banks are aggressively promoting debts among students, taking no account of the serious problems associated with getting heavily into debt at such a young age.

“There is an added issue that the government will not allow information about student debt to be included in pooled debt data that is shared among lenders. This means that banks are lending large sums of money to people because they are unaware of the debts they have already run up.”

Chester-based price comparison  website moneysupermarket.com  urged students not to open  themselves up to temptation in  the first year at university.

Spokesman Kevin  Mountford said: “A tiered  overdraft is often advisable.  You need much more self- discipline if you go for an  overdraft that lets you borrow  the full amount in the first  year. The danger is that, if you  blow the full amount in year  one, you leave yourself in a  difficult situation in  subsequent years.”