Graduates reveal the financial and psychological burden of student loan debt: ‘It makes you feel sick and horrible’

In a new report from the Higher Education Policy Institute (HEPI) and the Centre for Global Higher Education (CGHE), graduates in England explain their views on the student loan system, praising its income-contingent and repayment features but criticising the high fees and large debts.

Hidden Voices: Graduates’ Perspectives on the Student Loan System in England (HEPI Report 145) by Professor Claire Callender and Dr Ariane de Gayardon is based on interviews with 48 graduates who were subjected to the 2006 funding regime paying tuition fees of £3,000 and 50 more who were subjected to the 2012 regime, paying £9,000.

Professor Claire Callender, Professor of Higher Education Policy at UCL Institute of Education, Professor of Higher Education Studies at Birkbeck, University of London and Deputy Director of CGHE, who co-authored the report, said:

‘Our findings suggest it is important to listen to graduates’ different views and integrate them in debates on the future of higher education funding in England. Graduates offer a distinctive perspective on student loans. Their experiences may not always be easy to listen to and may be contrary to policymakers’ thinking, intentions and vision.

‘Nonetheless, there are significant lessons for policymakers. While there are benefits of the 2012 funding reforms, the changes exacerbated the very features of the student loan system graduates already found problematic and increased the burden of student debt. The views of graduates are vital for building evidence-based, sustainable and fair funding policies in the future.’

Dr Ariane de Gayardon, a researcher at the Center for Higher Education Policy Studies (CHEPS) at the University of Twente in the Netherlands, who co-authored the report, said:

‘Debt can take a psychological toll on graduates arising from the size and longevity of the debt, alongside the interest charged. All can potentially damage the lives and aspirations of future generations. When reforming the loan system, one objective should be to reduce the burden of student debt for graduates. To do so, we need to listen to the voices of graduates. Our new report provides important insights into what graduates feel about the English student loan system and which features work for them, and which do not.’

A Department for Education spokesperson said:

“The student finance system was built with students’ interests in mind, so that all those with the talent and desire to attend higher education are able to do so, regardless of their background.

“Repayments depend on the borrower’s income, ensuring that loans remain affordable, whilst fairly sharing the cost of higher education between graduates and the taxpayer.

“We remain committed to driving up the quality of standards and educational excellence alongside ensuring a sustainable and flexible student finance system. We will set out further details of the Higher Education settlement and our response to Augar in due course.”

UCU general secretary Jo Grady said:

‘This report highlights the inherent toxicity in the student loans system which punishes students for entering higher education, burdening them with decades worth of debt and placing a serious strain on their mental health. This is a mess for which successive governments must take responsibility.

‘The choice facing policy makers is not a binary one between a system of student loans or students having to pay up front themselves, but about instead looking seriously at the benefits of a publicly funded model for higher education, as is in place across much of Europe with great success. A publicly funded system would end universities’ unhealthy reliance on student fees, remove the debt burden from the shoulders of students and enable access to be widened further. Public investment in education more than pays for itself, and that is a message that needs to be heard loud and clear in Westminster.

‘Unfortunately, the government has been briefing that it wants to lower the salary threshold at which students start repaying their loans, making graduates pay more for longer. Students have been repeatedly told that tuition fees are justified because graduates typically enjoy higher earnings. With ministers considering new repayment rules that will hit graduates on lower incomes hardest, this already crumbling justification crumbles further.

‘Whilst universities have generated record levels of income through tuition fees, staff will rightly be sickened to see that the significant financial growth universities have enjoyed has not been shared with them, with spending on staff being held down whilst some vice-chancellors are adding tens of thousands of pounds to their already eye-watering pay packets. As staff at dozens of campuses take strike action over cuts to pay, pensions and worsening working conditions, the government needs to accept that its marketisation agenda has failed. We need a new approach.’

The main findings of the report include:

• Graduates think income-contingent student loans offer access to higher education and regard the repayment system as manageable, withthe income repayment threshold protecting against low earnings. Monthly repayments are seen as affordable and automatic repayments are valued.
• However, graduates consider tuition fees and interest rates to be too high, see the amount of debt owed as a burden and feel the repayment period is never-ending.
• Graduates describe emotional and psychological disturbance from their debt, with graduates in the post-2012 reforms cohort considerably more negative about their student loan debt.

Since the 1990s, England’s higher education funding system has been reformed many times, leading to a system based on high fees and loans. Undergraduate tuition fees for full-time students were introduced in 1998, and rose to £3,000 per annum in 2006, increasing further to £9,000 in 2012. The 2012 reforms enabled the lifting of the cap on student numbers but increased the burden of student debt.

The report includes comments from graduates about the loan system:

• According to one graduate from the 2006 funding regime cohort, ‘The amount that students have to pay is just ridiculous and honestly, if I had to pay the amount that students today have to pay, I probably wouldn’t have gone to uni at all’.
• A graduate from the 2012 funding regime cohort said ofthe accruing interest on their debt: ‘It makes you feel sick and horrible, you know: an absolutely horrible feeling inside your chest, your stomach’. 

Although the report focuses on England, the lessons are also likely to resonate in Wales, where high fees are also in place; in Northern Ireland, where the funding regime resembles the previous regime in England; in Scotland, where higher education funding remains contentious; and in other countries with income-contingent loans or which are interested in reforming their systems.