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In 1992, just two students declared themselves bankrupt in the UK. Last
year saw a record 900 students declare themselves bankrupt, after
borrowing heavily to finance their education. The total number of
graduates, who have declared bankruptcy since the introduction of the
student loans scheme, has reached the 4,000 level.
Student debt in the UK averages at around £12,000 a head and this is
expected to rise to nearly £34,000 by the end of the decade.
The greatest concern is that some students will be unable to cope with
the stress and trauma of such high levels of debt, at such an early
age. The National Union of Students has seen ever increasing numbers of
undergraduates seeking debt counselling. Tragically, there have been
cases where students have reportedly committed suicide because of their
debt problems.
Previously people were able to write off their student loans by
declaring themselves bankrupt, and 1,000 did exactly that. This
loophole in the law was closed in 2004, and today's students will still
be liable for their loans, even after declaring bankruptcy.
The worry is that some will be dissuaded from opting for higher
education by such high levels of borrowing. At the present time,
though, students do not have to start repaying their loans until their
income reaches £15,000, and then they will be liable for 9% of any
amount they earn above this threshold.
Most graduates are still positive about their future, and the UK
government estimates that qualifying for a degree can boost your
earnings by as much as £400,000 over your working life.
Clearly though, such high levels of bankruptcy amongst young people,
who are just starting out on their working careers, is of concern. |