Worrying statistics from the Debt Advisory Centre….
26% of British adults have a student loan that they are yet to pay off with a further 25% unaware of how much they owe, according to the latest report by the Debt Advisory Centre (DAC).
This news comes after Personal Finance Education (PFE) was made a mandatory part of the school curriculum in all secondary schools last September – an act taken to tackle the rising levels of debt and financial problems which made numerous headlines.
The significant number of young British adults finding themselves in debt without knowing or understanding how much they owe is incredibly worrying and brings the need for PFE to the forefront of all financial conversations.
The report’s findings
An equivalent of 13 million adults owes money to the Student Loans Company (SLC) which they have not even begun paying off.
The DAC report found that the amount of individuals that owed money varies depending on age:
- 65% of those between 18-24 years owe money
- 59% of those between 25-34 years owe money
- 30% of those between 35-44 years owe money
- 5% of those aged over 45 years owe money
12% of those who have a student loan commented that they are not currently earning enough to make the minimum student loan repayments while a further 53% said that they only have a rough idea of how much they owe and do not know an exact figure.
As many as 14% of interviewees claimed they have no idea how much they owe at all.
Whilst the majority of graduates interviewed do know the amount they owe to the SLC, more than half (58%) were unclear of the amount of interest that is being added and 48% said they have no idea what the interest rate was. A further 10% didn’t even know interest was being added.
A spokesman for the DAC Ian Williams commented:
“A student on a three year degree is likely to leave university with a student debt of around £40-£50,000 – which is a huge amount of money, whichever way you look at it. However, most people seem relaxed about the borrowing and just 15% regret doing so.”
Whilst going to university is a positive decision – both for the individual and the economy – it is vital that children are taught financial education from a young age.
This will equip them with the knowledge they need to make sound financial decisions as they approach university and ensure that their debts are not allowed to get out of control.