This is a topic close to my heart and I am sure many of you have gone to University and have a student loan or know someone who does. 

I find myself sometimes wondering whether the debt was worth it? Did I or will I benefit? What are your thoughts on this? 

The following statement gives us an idea of what the average student debt in the UK is (Student debt rising to more than £50,000, says IFS – BBC News): 

“Students in England are going to graduate with average debts of £50,800, after interest rates are raised on student loans to 6.1%, according to the Institute for Fiscal Studies. Those from the poorest backgrounds, with more loans available to support them, will graduate with debts of over £57,000, says the think tank.”

Whereas the average salary of a man in the UK is £30,525 per annum, and  for a woman in the UK is £25,336 (Source: Average Salary UK | Onaverage.co.uk), this changes also depending upon the industry:

Industry	Average salary
Financial services	£ 35,923
IT	£ 35,167
Education	£ 25,194
Construction	£ 31,014
Manufacturing	£ 29,869
Retail	£ 26,816
Software development	£ 34,809

Not the most comforting of numbers when you see it written down like that added with the fact that it takes the average person some 30 years to pay off their student loan, it all sounds crazy!

I myself, when presented with numbers such as these, lean towards having to think if there is something wrong with the system itself. Does a degree really need to be stretched over 3 years? 

A very important point to note is that the government sets what fees universities and colleges can charge for home students through the Higher Education and Research Act 2017. 

Some great news however is that there is talk of student fees being lowered and some additional funding in place for students (University tuition fees frozen in England for the fifth year in a row (moneysavingexpert.com)) although this still needs to be debated in parliament.

Also, in the last budget it was announced  that student fees will be frozen again for the academic year 2022/2023 –  which is the 5th year in a row that fees have been frozen, so this is really great news for those who started in September 2022. 

So what’s the impact of having a student loan on your credit report/score?

Throughout my research on Student Loans I have been able to confirm that there are no current plans for them to appear on your Credit Report or go against your credit rating at all which is wonderful news for many who would want to move on to the property ladder or make another big purchase using credit. 

When applying for a mortgage however, as with any other credit application you may make,  all your credit commitments will be taken into consideration, including your student loan, however it is nothing to overly worry about. 

It will simply be looked at like all other outgoings such as car loans, credit cards and personal loans. The calculation for your affordability will then look at your income and your outgoings as a whole so it will normally not have a large impact on your affordability. Lenders (who will each have a different criteria) will look at how much you have left at the end of each month to pay towards any new commitment and how a change in your income or outgoings will affect your ability to meet your mortgage payments.

As it does not appear on your Credit Report the mortgage lender will not know your total debt but simply your monthly payments. 

Hopefully that does put your mind at rest, however the best thing is always to pay off any debt 🙂 

One last thing to leave you with, make sure you check your credit score/rating regularly to ensure you have not missed any payments and are on top of your affordability so when the time comes to purchase a home or make a financial commitment you are fully aware of your borrowing potential.