University graduates are showing an increasing trend of deferring from some of life’s major events, such as buying a house and starting a family, because of the huge student debt that hangs over them, and some young people are put off going to university altogether in order to escape mountains of debt.
According to figures from uSwitch, 27% of recent graduates have delayed starting a family by an average of six years; a quarter are putting off marriage for an average of six years because of their debts; more than half have had any intentions of buying a house also thwarted by an average of six years.
One in four are even living at home with their parents as a result of financial restrictions caused by student debt and a house price increase of 203% over the last decade.
This situation has led to one in ten graduates considering bankruptcy as a solution to their multitudinous debts – an accumulation of student loans, overdrafts, and credit cards – or else face an average “debt sentence of 11 years”, says uSwitch.
Lloyds TSB Student Banking has reported that current new students are likely to have a debt of up to £20,000 by the time they graduate. Catherine McGrath from Lloyds said: “Students face higher levels of debt than ever before and with the added pressures of escalating house prices and increased competition for graduate jobs, it’s essential that they find ways to keep their student debt to a minimum.
“Good budgeting skills can really help students to start off on the right foot while they get to grips with managing their own money. A smart approach is to plan ahead and seek guidance now on how to manage your finances to avoid getting into trouble later on.”
One of the options potential students are considering in order to avoid the consequential debt is to not attend university at all. Indeed, Alliance and Leicester has revealed that 54% of 16-21 year olds already in work say they prefer earning money rather than the prospect of an impoverished university experience that leaves them debt-ridden and unable to progress as quickly with other aspects of their lives.
In order to avoid worsening their debt further, moneysupermarket.com recommends that students compare the various financial products on offer to them. Kevin Mountford, head of current accounts at moneysupermarket.com, said: “It’s vital that students see past the opening offers and look at which account will best suit their financial needs. A few free cinema tickets might be nice to have but they won’t help buy books or see you through to the end of term when the student loan has run out.
“Many students depend on their overdraft, so it’s best to look for an account that will offer an interest-free overdraft or at least one with a competitive long term offer to try and avoid incurring costly unauthorised overdraft charges.”
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