The number of graduates owing more than £100,000 in student loans has gone up by more than 3,000 per cent in a single year.
High interest rates and flat wages are thought to have contributed to the rising debt, with 6,531 British graduates now having six-figure balances.
This is an increase of 3,166 per cent compared with last May, when 200 graduates owed that much.
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British graduates have the most debt in the English-speaking world, the Sutton Trust found in 2016, and the average loan balance has only increased since then.
UK students borrow more than their American counterparts despite US degrees taking four years. This is likely to be because of high interest rates and flat wages over the past year, which have left graduates accruing interest on their debt without paying a substantial amount back. In total, 5.6 million graduates and students have outstanding loan balances with the Student Loans Company (SLC). The national total student debt is valued at £161 billion.
Someone who graduated in 2021 and earns £30,000 will repay only £244 this year while accruing £976 in interest.
The majority of graduates with Plan 2 student loans — those taken out after fees were raised to £9,000 a year from 2012 — will never pay off their loan and instead will make repayments for 30 years until the debt is forgiven.
Experts from the Institute for Fiscal Studies have calculated that 87 per cent of students will fail to clear their loan balances within 30 years. The interest rates mean many of these people will repay more than they borrowed.
Interest varies according to retail price inflation and graduate earnings, with interest for those on the highest salaries at 4.5 per cent.
For example, a graduate with a salary of £50,000 who borrowed the maximum amount for living costs and fees, is likely to repay £163,630 — more than £100,000 more than they borrowed. Yet this would still not clear the loan.
One student has a balance with the SLC for £175,830, the biggest outstanding debt held by any graduate. Another has £169,070 of debt and there are 29 graduates with loan balances of more than £150,000. Hillary Gyebi-Ababio, of the National Union of Students, said: “Student debt and financial insecurity are getting worse, and NUS research has identified that more than two in three students are concerned about their ability to manage financially.
“We’re hearing from students who can’t even afford to travel to their university library, and we know that students are relying on buy-now, pay-later loans from companies like Klarna which only compound the debt crisis.”
Michelle Donelan, the higher and further education minister, said: “The government has always been clear that where it can help with rising prices we will, and I will always strive for a fair deal for students, which is why we have reduced the interest rate on student loan down from an expected 12 per cent.
“I want to provide reassurance that this does not change the monthly repayment amount for borrowers, and we have brought forward this announcement to provide greater clarity and peace of mind for graduates.”
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Huge surge in graduates who owe six-figure student loan debt