Business

Student loans: 20 biggest debts revealed

The biggest debt currently owed to the Student Loans Company is £66,150, the BBC has learned.

A Freedom of Information request has revealed that the total sum of the 20 largest student debts is over £1m.

All but one of the students went to London institutions, where loans for living costs are higher, and were on courses that lasted a minimum of five years, such as medicine and law.

Universities Minister David Willetts said the amounts owed were "unusual".

If these people were training to become lawyers or doctors they were likely to have substantial earnings later on in life, he told BBC Radio 4's Money Box programme.

Higher future debts predicted

At the moment, the maximum tuition fee a university or college can charge in England is £3,290 a year, and students can take out a tuition fee loan to cover the cost.

Students can also receive a maintenance loan to help with their living costs: most students can borrow up to almost £5,000 a year, but students in London can borrow more - almost £7,000 a year.

But the maximum tuition fee loan in England will go up to £9,000 in September 2012, and maintenance loans will also rise.

Student debts could then reach £83,000 when the new system is introduced in England in 2012.

Figures calculated by leading accountants, show that a student borrowing £39,000 for a three-year course could pay back more than double that amount in total, in cash terms.

'Graduate tax'

Mr Willetts accepted that the loans would take longer to be repaid under the new system, but he said monthly payments would be smaller.

"Under the proposed new system, you will pay 9% on all your earnings over £21,000, instead of the current threshold of £15,000," he said.

"If you earned £25,000, repayments would be about £30 a month.

"The burden of the monthly repayment is what really matters to people."

He conceded the new proposals would constitute a "graduate tax".

Managing repayments

Students should not be put off by the headlines, according to Lynne Condell, who chairs the National Association of Student Money Advisers.

She said the monthly repayments are manageable and that going to university is an investment.

"There's so much value in going to university. It's not just about the money - it's a life changing experience," she said.

Students should plan their finances ahead and look for alternative benefits and support, Ms Condell advised.

"Universities have money to help students who are in financial difficulties; bursaries, the Access to Learning fund and scholarships, which hopefully will still be available in 2012," she said.

"If students have mortgages or children, or have a disability, lots of support is available to them, but nothing is given automatically, so students should seek advice to check which benefits they are eligible for."

Under the new system, which starts in September 2012 any unpaid debt will be written off after 30 years.

More on this story

Around the BBC

Related Internet links

The BBC is not responsible for the content of external Internet sites