Graduate university debt spirals

Diploma and mortarboard

Student debt levels are forcing students to put their lives on hold while they repay their student fees, a recent study reveals.

The average student debt now stands at £21,198 and takes 11 years to repay, according to figures from uSwitch.

The comparison site's survey reveals that as a result of these crippling figures many graduates are delaying major life choices.

Almost half (49%) of graduates have to delay buying their first home, while 30% have put off starting a family and 29% have waited longer to get married.

Read: Should you help your child repay their student loan?

Michael Ossei, personal finance expert for uSwitch, calls it a "sorry state of affairs".

He adds: "Going to university used to be the norm, but it is now becoming a catch 22."

In April, the government extended the cap on tuition fees to £6,000 with an upper limit cap of £9,000. These new levels will come into effect from 2012, and could have serious repercussions for future students.

The new system

There are concerns that in the future students may base their choice of university or course on the level of fees that they have to pay back but these are misguided and due to "significant misunderstanding", according to a poll of vice-chancellors at English universities.

"It is clear that the higher education community has concerns over the way new fees and funding package in England has been communicated and that efforts to promote the huge benefits of higher education have been hampered by the politics surrounding fees," says Steve Smith, president of Universities UK.

Even though fees will increase in 2012, there won't be an increase in graduates' monthly repayments, as it will be set at 9% of earnings above £12,000. 

Smith points out that this in fact will see graduates on average £540 better off under the new system because they won't start paying off their loan until they are earning over £21,000 instead of the current £15,000 threshold.

On top of this, student debts will be written off after 30 years and experts argue that while student debt may look unpalatable it shouldn't be a reason to abandon university:

"Without a degree getting a job in today's stagnant market may be even harder", says Ossei.

He adds: "Higher fees and lack of job prospects may be out of your control, but if university is right for you it's more important than ever that you are as financially prepared as possible."