In 1992, just two students declared themselves bankrupt in the UK. Last year saw a record 900 students declare themselves bankrupt, after borrowing heavily to finance their education. The total number of graduates, who have declared bankruptcy since the introduction of the student loans scheme, has reached the 4,000 level.
Student debt in the UK averages at around £12,000 a head and this is expected to rise to nearly £34,000 by the end of the decade.
The greatest concern is that some students will be unable to cope with the stress and trauma of such high levels of debt, at such an early age. The National Union of Students has seen ever increasing numbers of undergraduates seeking debt counselling. Tragically, there have been cases where students have reportedly committed suicide because of their debt problems.
Previously people were able to write off their student loans by declaring themselves bankrupt, and 1,000 did exactly that. This loophole in the law was closed in 2004, and today's students will still be liable for their loans, even after declaring bankruptcy.
The worry is that some will be dissuaded from opting for higher education by such high levels of borrowing. At the present time, though, students do not have to start repaying their loans until their income reaches £15,000, and then they will be liable for 9% of any amount they earn above this threshold.
Most graduates are still positive about their future, and the UK government estimates that qualifying for a degree can boost your earnings by as much as £400,000 over your working life.
Clearly though, such high levels of bankruptcy amongst young people, who are just starting out on their working careers, is of concern.
Diana Middleton writes on matters relating to debt advice in the UK, and especially debt problems. She is particularly interested in personal finance, writing on best approaches to getting a secured loan, and the background issues relating to debt consolidation. |
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