With almost two thirds of university entrants from England and Wales who applied for maintenance grants for this year being unsuccessful, and the average graduate owing £13,501 when they leave, according to Barclays, combined with a survey by High Fliers Research showing that only 21% of students were confident of managing to enter a graduate-level job this year, it is not surprising that there is a feeling of gloom hanging over many UK university entrants.

According to a survey of students from 30 institutions; 63% believed there are not enough graduate jobs for everyone leaving university this year, with a fifth stating that they felt that there were only limited jobs available.

Jeremy Law, the head of student and graduate banking at Barclays said, "If this trend continues, students starting a three-year course this September could be graduating with debts of almost £20,000…graduates will find themselves with debts for years to come which may affect their ability to buy homes and invest in pensions…prince or pauper, these levels of debt may act as a deterrent to some people considering going to university."

There are sources of help advice available to prevent student’s finances snowballing out of control, with important financial institutions such as Moneynet and other online comparison web sites providing guides to help students with their money, and Barclays Bank recently encouraging students to;

“Consolidate their borrowing and pay off the debts with the highest interest rates first by making use of the cheapest borrowing options, for example, interest free graduate overdrafts or graduate loans…where possible graduates should keep a tight reign on their finances to help set them up financially for the future."

With increases in general levels of graduate debt, negativity surrounding job prospects, and the government concerned with meeting its 2010 target of getting 50% of the under-30s into university, you might expect trepidation over long-term debt to be entering into the psychology of both students and government alike, however this does not, overall, appear to be happening. The government is determined to continue with its plans, and students are still racking up huge student loans and personal debts by focusing on everyday financial pressures, rather than their future.

While worries about money add to their levels of depression, anxiety and stress, university students in Bath declared that it was the short-term lack of cash for paying bills and covering everyday expenses that caused them the greatest concerns.

Students interviewed By Dr Adrian Scott of the University of Bath indicated that, "They think there's nothing they can do about the debts, so there's no point worrying".

A report, conducted for Liverpool Victoria has suggested that in 18 years time when today's ‘Child Trust Fund Generation’ go to college, English student debts will average approximately £43,825 which would be about 83% of their first years graduate salary. A worrying figure, but one which does not, according to Liverpool Victoria; “take into account that there is a big push by some universities to get the cap on top-up fees lifted and this would have a massive effect on these figures - probably doubling or tripling the debt."

Dr Scott also found that students were becoming more accustomed to the idea that they would have substantial levels of borrowing, and their perceptions of what was considered an acceptable level of debt was changing. Cognitive strategies rather than financial adjustments were occurring to justify long term debt instead of dealing with it head on. An annual Unite/Mori survey analysing student attitudes, published earlier this year, showed that students were becoming increasingly acclimatised to the idea that, as a student, they would have to acquire certain amounts of debt, which would need to be paid back after graduation. Possibly a major shift in attitudes towards debt will occur should the cap be lifted on top-up fees, but presently students are not being put off going to university by the idea of starting their working life shackled with debt.

Overall personal debt in the UK is increasing at a rate of £1m every four minutes however the rate of change in the levels of student debt are accelerating far faster than the already worrying UK average (five-fold increase in total graduate debt over the last decade). If no change is made to the graduate jobs market or to student funding, and future graduates are to avoid running the risk of being branded an adverse credit risk at the start of their earning career, then they need to take the financial bull by the horns at an early stage, and take long-term financial planning seriously whilst at college, to reduce their arrears on leaving rather than looking to the never-never.

Resources: Moneynet University of Bath

Richard lives in Edinburgh, occasionally writing for the personal finance blog Cashzilla, and staring out the office window when he should be working.

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