In about five years, graduates in England will have to handle an elevated debt load as the interest rate on undergraduate student loans is expected to double.
Statistics presented show graduates’ debt situation has reached alarming levels due to accrued interest. These loans are estimated to increase by four billion and four hundred million pounds (£4.4B) by 2024.
Graduates jeopardized by high tuition fees
A considerable part of the debt load faced is prompted by the tripling of tuition fees to about nine thousand pounds (£9,000) annually.
After five years, the entire interest will have risen by nearly four billion and one hundred million pounds (£4.1B).
These figures are a cause of concern for students because their financial is weakened upon completing their courses with a debt burden to pay.
In England, the next cohort of undergraduates attaining their BTech and A-level exam outcomes this week will also not be spared.
According to shadow education secretary Angela Rayner, ascending debts are dangerous as they generate a toxic arrangement for graduates and taxpayers.
She asserted that this problem could be averted if tuition fees were scrapped. There are many sides to this issue that bears looking into.
Graduates’ loan repayment capabilities hindered
Rayner stipulated that graduates were being burdened with enormous debt levels. This is despite the fact that they were beyond their scope in terms of repayment.
Moreover, the presence of a broken student loan network worsens the situation as taxpayers are forced to cater for half its cost.
Rayner infers that the government should be transparent about how higher education is funded. She also stated that labor should eliminate tuition fees and reinstate maintenance grants meant for less-privileged students.
Rayner believes this can be instrumental in triggering the optimal potential of each learner irrespective of background.
Graduates charged differently
Graduates making at least forty thousand pounds (£41,000) annually were the most charged at an interest rate of over six percent (6.3%) based on a 2012 student loan post.
This is, however, expected to reduce to an interest rate of more than five percent (5.4%) from September 2019 based on a recent announcement.
The graduates’ debt burden will also be endangered by high inflation expected to reach over twenty-six thousand pounds (£26,575) from April 2020.
From government statistics, researchers speculate that three of every ten England undergraduates who began in the 2018-2019 academic year will have their student loans fully repaid. This will include maintenance and tuition loans.
Additionally, the high student loan burden faced by graduates has made some of them become victims of well-crafted scams by alleged relief companies that promise benefits such as entire loan forgiveness.