Over the last five years I’ve been a student at two different British universities. When I graduate this June my debt will stand at just under £40,000, with a maximum interest rate of 6 per cent for the next 30 years, and this is normal for most students. However, amidst all the heated debate about tuition fees, it hardly gets mentioned that the burden of all this debt is simply leading students into even more debt.


Many of my friends have applied for postgraduate degrees to begin in September. Indeed, with rising pessimism about the job market, this has become the default position of almost everyone I speak to. It is no coincidence that the number of students acquiring masters’ degrees has skyrocketed over the last few decades (11 per cent of 26-to-60-year-olds in work have postgrad qualifications, compared with 4 per cent in 1996, according to the Guardian).

Many students are using postgraduate study to delay moving into the jobs market, because they might as well. Students recognise that almost no one will end up paying back their debt and, because repayments are calculated as a percentage of income rather than as a percentage of the remaining debt, there is no cost to borrowing more, even when a masters costs around £10,000 (plus maintenance). Many young people are so despondent about their future that they are happy to acquire endless debt.

And they’re not wrong. The IFS predicts that 75 per cent of student debt will be wiped after 30 years without being paid back, and this will be higher once the repayment threshold is raised to £25,000. This should worry the government as the SLC has made students so reliant on debt that they will continue to fund their education even once they graduate. The current loans model will not be sustainable, not just because students can’t pay back their debt, but because that very fear leads them to borrow even more money which, in turn, will not be repaid.

Martin Lewis has also pointed out the possibly disastrous consequences for a generation of students who ‘have lost the fear of debt, and end up taking out credit cards or payday loans’. Even more worrying is the fact that the terms of repayment for student debt can be adjusted by any future government, as evidenced by the recent hike in maximum interest rates, which were already linked to the inaccurate (higher) RPI rate of inflation.

It is now a running joke at university that ‘doing a masters’ is a byword for ‘running scared from adulthood’. This helps to devalue higher education, in the way that much of the SLC system does, and universities are complicit. They invest heavily in glossy brochures to persuade students to pursue postgraduate degrees, offering discounts for alumni. A student’s actual academic commitment, or ambitions within academia are not taken into account, because they don’t count financially.

The hidden cost of the SLC system is that students no longer worry about accruing vast amounts of debt because they don’t think they’ll ever repay it; and that should worry everyone.