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Student loans are "feeding into debt culture"

Published: Tuesday, 05 June 2007   Category: Government policies

Students must be more careful about borrowing money amid claims that student loans have helped to create a "debt culture" among many young university-goers.

Thanks to low interest levels and deductions being taken from earnings, paying off debt from a student loan itself is rarely seen as a problem for graduates but, according to a leading credit expert, has caused many students to become too carefree about spending and borrowing habits.

Chris Tapp, associate director of Credit Action, a national charity aimed at helping people better manage their finances, argues that student loans are now creating a "way of thinking" among many young people that has had a major contribution in rising numbers of people in their 20s running into serious debt problems.

"Students have grown very used to spending three or four years of their lives living in debt, spending money that isn't theirs that they'll have to pay back, and probably borrowing on an overdraft and credit card at the same time; becoming very, very comfortable with a lifestyle that is essentially lived beyond their means," said Mr Tapp.

"Whereas 50 years ago there was a very healthy amount of caution before people got into debt… We now have a generation for whom you're extremely odd if you're not in a substantial amount of debt. It's that culture of borrowing that student loans have really fed into," he added.

According to Credit Action figures, average UK borrowing stood at £4,537 per person at the end of April this year, while Natwest research for 2006 showed that the average graduate now leaves university with total debts in excess of £13,000.ADNFCR-1068-ID-18170139-ADNFCR

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