After all the late night partying of university, what is the one major hang over that most students are complaining about when its all over and they’ve graduated? The answer is student debt. Student debt levels continue to rise every year as banks and other lenders throw more and more credit their way while they are still studying. It seems as if the banks have plenty of faith in graduates being able to pay back the loans, and most graduates would confirm this. What is causing graduates stress is not toe overall levels of debt they have racked up while studying, which still averages under £15,000, but the fact that they have to pay such a high proportion of their new wages in debt servicing.
Graduation and the start of your working life are supposed to be a time of relative prosperity and the privations and economies of the student years should finally be over. However, more and more graduates are reporting that they have to pay so much in loan repayments that they are just as badly off as when they are students.
For example, a huge proportion of student debt is made up of government sponsored student loans, which come from the Student Loan Company. The repayment rules for these loans are quite lenient. Beginning in the April after you graduate, 9% of all your earnings above £15,000 will be taken to repay the loans. The interest is also quite preferable.
While this seems to be a fairly gentle way of repaying student loans, it should be remembered that these not the only debts that students have. Student overdrafts of up to £2,000, which are interest free, are now fairly standard practice. Almost every student will be given one when they open a student bank account and it’s rare to find a student who hasn’t spent it all.
Then there are credit cards and store cards, which are increasingly easy to get your hands on. Add to this the expenses of moving home when you graduate, starting a new job, getting a new place to live, and its no wonder that most graduates feel every bit as financially constrained as when they were still studying.
There are graduate loans available however which can be used to ease your way into working life. These offer postponed repayment terms so you have some time before you have to start repaying them all. The interest rates are generally pretty favourable and combined with the repayment holiday, which might be up to two years from graduation, you can really ease your way into working life.