English university graduates face higher debts on graduation than their American counterparts, and owe more than those in Canada, Australia and New Zealand, according to a new Sutton Trust report.
Drawing on the most recent published data from respective countries the report, called Degrees of Debt, shows the typical US graduate owes about £20,500 for students studying at public / private non-profit universities to £29,000 at private universities, their English counterparts owe an average of over £44,000.
Partly due to generous scholarships, the average graduate of private non-profit US universities, which include the Ivy League, finishes with £23,000 of debt despite the typical course lasting four years compared to three in England.
However, the report notes that UK graduates benefit from an income-assessed pay-back system held by the state. These are compounded by interest rates of up to 3% over inflation, but some of their American counterparts face even higher interest rates, with loans that are not linked to their incomes.
While UK and Australian graduates can take a ‘repayment holiday’ when their income dips, only 19% of US students receiving the most common federal loans are enrolled on similar schemes.
The Sutton Trust is concerned that the abolition of maintenance grants this September – reintroduced when tuition fees rose from £1,175 to £3,000 in 2006 – will leave the poorest students with debts in excess of £50,000.
The government has also decided to freeze the threshold at which graduates start repaying loans at £21,000, which will accelerate the rate at which students pay back loans resulting in higher monthly payments.
Tuition fees in England are higher at an average of £8,800 (the maximum is £9,000) than for students going to a home state public university in the US (about £6,600).
Fees for students out-of-state and at private universities are often higher in the US, but many have generous bursary schemes that offset fees for low and middle income families.
The Sutton Trust is a foundation set up in 1997, dedicated to improving social mobility through education.
Sir Peter Lampl, chairman of the Sutton Trust and Education Endowment Foundation said: “These debt levels are by far the highest in the English speaking world and are more than double average debt levels at universities in the United States, where students study for four year programmes, rather than three.
“They impact on the ability of graduates to go to graduate schools, to afford a mortgage, the timing of having children and other major life decisions.
“The cost of going to university has become so expensive that more young people should seriously consider higher level apprenticeships, preferably to degree level. By choosing this route they will earn while they learn, incur less debt, and develop skills which are greatly valued in the workplace. We need more good apprenticeships to offer genuine alternatives to university degrees.”