Student Loan Debt Crisis Worsens as Interest Rates Rise

The student loan crisis is growing in the UK. In 2023, the average student loan debt was over £44,000 per student. Beyond this, rising interest rates mean that costs are rising even higher all the time. For many people, this means a lifetime of potential debt repayments. 

How did the situation get to this point? Can it be controlled? This article will examine both of these questions and provide some tips for navigating the process.

How Are Student Loans Structured In The UK?

Each national government that offers student loans has its way of structuring them. In the UK, loans are divided into five levels of repayment: Plans 1 through 5 differ in the amount of time that graduates have to repay, and the lengths of time vary from ten years to 40. While these numbers might sound reasonable, there are many factors involved that have made repayment difficult. 

In addition, students can take out loans either for tuition alone or for a combination of tuition and housing (as well as living expenses, etc.). This second type is called a maintenance loan.

Why Is Student Loan Debt Spiralling Out Of Control?

Several factors have been contributing to the rise of the student loan crisis in recent years. 

Increase In The Cost Of Living

Among them is the sharp increase in the cost of living recently. Because of high inflation rates and a subsequent rise in the cost of living, universities have had to raise their tuition accordingly. The increased tuition fees cover both things such as instructor salaries, as well as building maintenance and other types of operations costs. As rates are now higher than many families can afford, the number of students who take out loans has subsequently risen, as well. 

The cost of tuition has increased almost tenfold since 1998, from £1000 a year to over £9000 per year. This is far out of the comfort range for the majority of families, so many more students are forced to take out loans to cover their tuition than in the past.

Decrease in Overseas Enrollment

Another factor involved in the student loan crisis is the shifting in government spending priorities. Higher education is now at its lowest spending point since the 1990s. Beyond this, there is a concern about decreasing enrollment among overseas students, which used to be a major contributing factor to the decline in government funding. The higher tuition that overseas students pay has long been a big contributor to university finances. 

As there is now a cap on overseas enrollment, universities are in an even more difficult position and are therefore forced to raise their domestic tuition even more. This has become a vicious cycle that has made payment more and more challenging for students.

Steps You Can Take

Fortunately, there are ways that you can make the situation more manageable. One of the things that will help you manage your loan situation better, and also your finances overall, is improving your financial literacy skills. Learning how to manage your finances more effectively will help you:

• To invest wisely so that you can build your savings and stay out of debt/manage your existing debts more effectively

• To create and maintain a budget

• To save money for “rainy days” when your finances might fall short

• To avoid loan debts

Overall, you might think of taking another type of loan to pay off your student loan. However, this needs to be considered the last option. £50 payday loans may work, as these types of loans are easy to get and can help you out a great deal if you’re struggling to make a student loan payment. However, you need to be careful and cautious, as, there are several factors that you should take into consideration when taking out a loan. That includes interest payments, loan types, providers, etc. Quidable recommends carefully reading up on these requirements before you apply.

Unlike many other types of loans,  payday loans have minimal requirements, and you do not need to have a long credit history or own major assets. 

Make Your Life Easier Today

If you make an effort to tackle your loans early, you can shift your focus to other types of priorities. While the overall student loan problem is something that the government and the higher education system will ultimately have to fix, you can make your situation easier by giving yourself some much-needed relief when times get particularly tough.