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Actual average borrowing by income in each part of the UK

April 28, 2014

The Student Loans Company has just provided figures on average actual borrowing by income in England, Wales and Northern Ireland in 2012-13.  The figures, with those already published for Scotland, are here UK debt distribution data. They cover all borrowing, for fees and maintenance and provide for the first time up-to-date comparisons by income of actual student borrowing across the UK.

How debt is shared

Looking at what students actually borrow in Wales, Northern Ireland and England, debt is shared quite evenly across the student population by income.  Although students at higher incomes in  these jurisdictions are in theory subject to higher loans, in practice within each of these countries graduates are leaving university with reasonably equal amounts of debt, regardless of their family background.   This is what you would expect from the design of the schemes and taking account of higher loan uptake at lower incomes.

The picture is starkly different for Scotland.  Here, students who are assessed as having no access to family support take out more than twice as much debt per head as they would if debt was shared equally among students. These are mainly mature students, but also lone parents and those leaving care.

Those at the next level up, with incomes up to £30,000, carry almost one-third more debt than they would if it was equally shared.

Those at incomes over £30,000 on average are carrying just over half of what they would, if debt was equally shared.

These 2 graphs show how the share of borrowing by income compares across the UK.  The second one charts this against  differences in average borrowing. UK debt shares

Actual borrowing levels

As a result,  the annual figures for average actual borrowing by those deemed to have zero income in Scotland is already  85% of the figure for Wales, or only £750 lower.  The gap opens up as incomes rise and is especially wide at incomes over £30,000.   Here’s a graph showing the figures. Average loan per head in UK

These are annual figures, so it can be predicted that at the lowest incomes, Scottish students doing a degree and usually studying for a year longer, will in practice have more debt, in some cases nearly one-third more, than those from Wales or Northern Ireland.

These figures  also predate the large grant cuts which took effect in Scotland in 2013-14.  Just as the English averages will be higher again in 2013-14, so will the Scottish ones, as grant cuts and living cost increases provided purely through loans are applied to all SAAS-supported students, not only new entrants.  These increases are likely to add between £1000 and £2000 to average borrowing for students at lower incomes.

The Welsh system is relatively stable.  Next year Scotland stands a good chance of catching up and possibly even over-taking Wales for annual actual borrowing for some or all of the poorest third or so of students.

Is this a problem?

Not according to most of people who drive the debate about higher education and student funding in Scotland, who – it needs to be said repeatedly – largely come from the sort of backgrounds where people benefit most from this arrangement, although they may not realise that their benefit is being provided at the expense of others who start with fewer advantages.

Maybe the poorest students don’t mind carrying most of the debt, in the interest of keeping higher education much cheaper, or even free, for others.  Or maybe they just don’t know they are doing it.  It would be good to know which.



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