Student Loans Debt Reaches GBP3.9 Billion

Fri, 20 Jun 2008

The level of student debt in the UK has soared by a third, according to latest figures from the Student Loans Company .

The SLC revealed that the total amount it lent to students in England increased 32 per cent to £3.9 billion between 2007 and 2008.

In Wales the level of borrowing rose by 18 per cent to £193.2 million and in Northern Ireland it was up 39 per cent to £170.6 million.

While the rate of inflation in the UK increased to 3.3 per cent in May, the highest level since 1992, those paying off student loans continue to be hit by an even higher rate due to what has been dubbed as the "ultimate stealth tax" by opposition MPs.

Despite the Government switching its official inflation measure to the Consumer Prices Index (CPI) in 2003, it is still added to student loans at the old Retail Price Index (RPI) rate, which has risen to 4.3 per cent - a full one per cent higher than the official rate .

But because the SLC only adjusts the figure it uses once a year, the amount graduates owe will continue to grow at an even higher rate of 4.8 per cent until August.

According to the Conservatives, the use of the old measure means the Treasury gain an extra £500 million a year, but as a result most new graduates will continue to see their debt levels grow even once repayment of their loans has begun.

Wes Streeting, president of the NUS, warned that the huge levels of debt being accumulated by students “cannot be sustained in the long term, “either for the higher education sector or for the economy as a whole”.

Shadow higher education secretary Rob Wilson said a review of university funding was now an "urgent" priority.

"The significant rise in the amount lent to students coupled with the big rise in inflation figures suggests that students are, like many others in the UK economy, under heavy financial pressure," he commented.
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