The 100,000 degree: Middle class graduates face repaying more than three times the cost of feesEnormous debt compares with repayments of 42,000 for richest graduatesIncluding living costs, average student debt predicted to hit 53,000
07:33 GMT, 10 December 2012
When Universities Minister David Willetts trebled the cap on tuition fees, he said a graduate would earn an average of 100,000 more over a lifetime.
That figure appeared to justify many universities charging students 9,000 a year for their education.
But Government figures reveal that the 100,000 benefit could be completely wiped out for thousands of middle-class graduates.
Graduates who go on to get a middle-income job could see the cost of their loan rocket by more than three times the total of the fees as a result of interest charges.
Expensive education: Graduates who go on to get a middle income job could see the cost of their loan rocket by more than three times the total of the fees
That enormous debt compares with repayments of as little as 42,000 for the richest graduates, who earn enough to repay their loans quickly, and repayments of zero for some of the poorest graduates, who will eventually have their debts wiped after 30 years because they have never earned enough to begin paying them back.
Taking into account living costs, the average student debt is predicted to hit 53,000 by graduation.
The landmark 100,000 figure, revealed in Government documents, includes the interest piled on to the debt for some graduates during the time it takes them to repay the loan. It is far higher than the 70,000 it was previously estimated students would end up paying back over their lifetimes.
A graduate’s monthly repayments depend on their earnings and are currently set at 9 per cent of income above 21,000 a year, regardless of the interest rate or size of the loan.
Government figures show almost 300,000 students – 70 per cent of those studying – who started university in the autumn will eventually repay between 65,000 and 85,000.
Taking into account living costs, the average student debt is predicted to hit 53,000 by graudation
Those who go into high-paying jobs such as medicine, finance and law will pay back less because they will start to pay off their debts sooner.
Around 20 per cent of graduates with the lowest lifetime earnings will never come close to repaying their fees and the debt will be written off after 30 years.
But around 10 per cent of students who are in the ‘squeezed middle’ and go on to middle-income jobs could end up paying between 85,000 and 100,000.
Chuka Umunna, Labour’s business spokesman, said: ‘Students will never forgive this Government for hiking up the costs of going to university. These figures show that, as ever, it is middle and lower-income families who are being hit hardest.’
Liam Burns, president of the National Union of Students, said: ‘It is shocking that politicians treat the potential of a generation before they have even started their working career with such nonchalance.’
University applications in England fell by 9.9 per cent this year after the higher rate of tuition fees was introduced in October.
A spokesman for the Department for Business, Innovation and Skills said: ‘The Government’s reforms have made the university system fairer and more progressive.
‘Most new students will not pay upfront, there will be more financial support for those from poorer families and everyone will make lower loan repayments than they do now once they are in well paid jobs.’