According to government figures, the cost of attending a university is as follows:-
Up to £9,000 per year in course costs.
£6,897 per year in living costs (including basic living requirements, household costs, course and non-course related costs such as study material, travel and entertainment).
It has been calculated that, in their final year, the average figure owed by a student leaving in 2007 came to £15,000.
With tuition fees in a large number of English universities set to triple in 2012 the final costs of a university education will be far greater. Researchers have calculated that the average predicted amount of debt for 2011-entry students upon leaving university will be around £26,100, while those starting in their courses in 2012 are expected to leave with a massive debt approaching £53,400.
Once a student graduates, they then have to begin repaying that debt out of their earnings. Without the guarantee of a job and other financial pressures, such as mortgages or outstanding loans, this can be a very daunting prospect.
Initially, a graduate would be well advised to contact their bank and organise a meeting with their account manager. At this meeting they should be able to discuss their current situation, their future prospects and plans, and hopefully arrange a repayment plan that will allow them to maintain a reasonable standard of living and pursue their career, whilst paying off their student loan and any other debts.
If the bank cannot or will not offer an affordable repayment plan, then there are other steps to be taken before seeking more drastic measures.
In this event, a graduate should contact one of the three major credit-watching bodies - Equifax, Experian or Creditcall – and get a copy of their credit rating. Thanks to the Consumer Credit Act of 1974, it is now a consumer’s right to obtain a copy of their credit rating.
A credit rating is a score awarded to a consumer, reflecting their financial history and considers factors such as a person’s track record in making repayments on loans, meeting bill payments and paying off debts.
This score is used by potential lenders to assess whether the consumer is high or low risk. If the consumer is high risk, it is likely that, in the future, they may be refused loans, mortgages or credit cards, or, if their application is successful, pay higher rates of interest for those services.
If the graduate has credit card debts on their credit score, they are entitled to offer their version of events, which may hold sway with certain loan applications in the future.
The next step is to find employment. A bank is likely to look more favourably on a graduate who is able to show that they are willing to try and pay off the debts incurred by their student loan and may even agree to another meeting to arrive at a positive resolution for the situation. While this may put immediate career plans on hold, again, it does have a beneficial effect on the graduate’s credit rating.
The other route available is to take a further loan to pay off the existing one. However, this may be harder than it seems with the affected credit score having an effect of its own; lenders may not be so enthusiastic to offer a loan to someone who, apparently, has little or no means of meeting repayments. Have a look at the Santander website for more on loans.