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As students across the country come to the end of their courses, analysis by online credit report provider Callcredit Check shows that the average student debt will take over 12 years to repay.

YouGov research commissioned by Callcredit has also shown that 44% of young people aged 18 – 24 are not saving any money at all, but at the same time 64% are more concerned about their financial situation today than in April 2008.

As the average student debt is £15,700 and the average student starting salary is £22,300, the monthly repayments for a graduate with this debt would start at £54.00 a month and would take up to 12 years to repay taking into account an annual average wage increase of 4.6%. Whilst of course inflation, interest rate, salary and bonus changes affect the size and rate of repayments, this demonstrates what a tough financial environment students are graduating into.

What is worrying is that the survey found that some 18 – 24 year olds are spending over 50% of their salary on unsecured debt. Those coming out of full-time education need to start saving straight away rather than amassing dangerous unsecured debt, which can pile up over the years, crippling people financially in the future. Debt today can lead to mortgage rejection, arrears and even repossession in the future.

Owen Roberts, head of credit report provider at CallCredit says: “Managing your finances as a student or a new graduate can be a tough. As a graduate in particular, trying to balance what may be a relatively low income with high debt levels, rent and other costs of living can prove very tricky.

"Crucially, it’s at this time of life you may start to see the impact of your credit history, as lenders will use it to decide whether to lend to you and at what rate. While each lender has different criteria, key to working up a good credit score is showing a consistent ability to service your debt levels, so paying phone bills, rent, credit cards, student loans etc on time is important if you’re looking to secure the most competitive deals.”

SOURCE: Callcredit, 17/06/09

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