Official figures, released in response to a Liberal Democrat parliamentary question, suggest that although graduates are claimed to earn up to Â£100,000 more over their lifetime, a third are unable to start making repayments.
This admission by ministers indicates nearly 400,000 unpaid student loans, simply because students are not earning above the Â£15,000 threshold up to seven years after they have graduated.
In numbers, out of the 1,237,300 students who still had money to repay on their loans, 384,300 had not begun repaying the loans at all.
Coupled with the global financial crisis and a cap on recruitment, the rate of inflation for cheap loans now runs at 4.8%. Wes Streeting, president of the NUS, said that this figure, added to account for inflation, made a Â“mythÂ” of the pledge that students received cheap loans.
Neil Munroe, External Affairs Director at credit reference agency Equifax, explained that in the current climate it was vital that students remain in control of their financial situations. Â“Students and their parents can easily run the risk of misjudging what they can afford when it comes to funding student life,Â” he said.
Mr Munroe added students were also underestimating their salaries once they graduate Â“by over Â£2,000Â”. He said Â“careful preparationÂ” was needed, as new graduates were paid an average wage of Â“Â£16,600, rather than the Â£18,600 they had expected.Â”
The Liberal Democrat Universities and Skills spokesman Stephen Williams stated: Â“the burden on new graduates is going to be even greaterÂ”.