Student Loans Harm Credit Ratings
12 September 2005
Large student debts will cost under-graduates well into their thirties, says Moneynet chief Richard Brown.
He says that large student debts will make it harder for students to get mortgages and other loans in future and that IFAs should be encouraged to warn their customers of the danger of large student loans.
He said: “IFAs will need to re-address the financial landscape.
“Their traditional client base will have less money during their twenties and early thirties to put into pensions, investments and savings. But, there will always be a market for IFAs, as graduates will still tend to get married, buy a home and have children and therefore need products like life insurance, income protection and mortgages.”
The warning coincides with the launch of Moneynet’s new section on debt consolidation loans in light of the country’s spiralling debt problem.
Australian research last month found that graduates still repaying student loans were more likely to evade taxes by taking cash-in-hand jobs, or not declaring all of their earnings.
Last month the government announced that after top-up fees come into force in 2005, the minimum debt for a graduate will be £15,000, and they will still be paying it off into their thirties.
A survey by NatWest bank last month showed that almost half of sixth formers said they would be “less inclined” to go on to higher education because they were put off by new fees and the prospect of larger loans.
Meanwhile, high street banks predicted that student debt will have doubled by 2009.