Debt a fact of life for most students

UK students currently have, on average, over £7,500 of debt, according to the Halifax Student Finances Survey 2007. For most students debt is a fact of life, for some it is something they will spend many years after graduation trying to repay.

Financing Studies

Students use a combination of methods in order to pay for their studies. The most common of these are working (52%) and parental contribution (50%).

Students based in Scotland are most likely to work to support their studies, two-thirds having jobs (67%). However, less than half (44%) of students in the East Midlands say they work to pay for their studies. Parents of those at university in Northern Ireland are most likely to be providing financial support (66%), whereas those with sons and daughters in the North East were least likely (41%).

Student Debts

Half of UK students (50%) have debts of over £7,000. For about a third (30%) it is more than £10,000. Regionally, the variation is pronounced, students attending university in the West Midlands have, on average, £8,464 in debts, the highest in the UK. Those at universities in Northern Ireland have the lowest average level of debt with just £4,364.

The overwhelming majority of students (82%) also expect to leave university with debts. Those students in Scotland are the most optimistic; around a quarter (24%) expect to leave university with no debt. North East students seem least optimistic, almost all (93%) expect to leave with some debt.

Composition of Student Debt

The survey looked at the 3 common forms of student debt; Student Loan, overdrafts and credit cards. Most students surveyed had a Student Loan (83%), with those in the South West most likely to have one (89%). Next was the overdraft, almost three quarters (73%) of students having the facility, even if not currently in use. Credit cards were used less frequently, less than half of students (43%) taking the plastic option.

The average level of student loan across the UK is £4,550, according to this new research, though more than half of students have less than £4,000. Students in London have the highest loans on average (£5,456), while those in the North West have the lowest (£3,912). Notably, one in five (19%) studying in Wales has a student loan of over £10,000, the highest proportion of any region.

Of those with credit cards, almost half (43%) have less than £500 outstanding on their plastic. The average credit card debt amongst students is £777.80. Regionally, those studying in the North east owe the most (£1,109), with those in Wales owing the least (£597.70). Students in the South West are most likely to owe more than £1,000 on credit cards (25%).

Half of students say that they are currently overdrawn (50%). Of these one third (33%) are overdrawn by £1,250 or more. The average overdraft across the UK is £951.60. The highest average overdraft across the regions is in the West Midlands (£1,029), while those in the Eastern region have almost £200 less overdraft debt. The average there stands at £859.70.

Student Expenditure

The Halifax Student Finances Survey also looked at what students spend their money on. Accommodation is, unsurprisingly, the largest weekly expense students have. The highest level is seen in the Eastern region (£74.80), the cheapest area being Northern Ireland (£34.50).

Spending on "socialising" and luxuries – such as cigarettes, alcohol, pubs, cinemas and take-aways, runs at four times the level of that on course materials, books and stationery. Each week students spend, on average, £41.20 on these areas compared to just £10 on equipment and materials for their studies. The boys (£46.80) are bigger spender on "socialising" than the girls (£36.80) and they also spend less on their course materials (£9.00) than the girls (£10.80).

Earning Expectations

When asked what salary they expected to earn in their first job after leaving university, students stated that they expected to earn £18,790 a year on average. Boys were more optimistic, on average they expected to earn £19,919, compared to just £17,893 for girls.

Just less than half (45%) of students expect to earn more than £20,000 in their first job. However a significant number (15%) expect to be earning less than £290 per week (£15,000 per year). Students in London have the highest earning expectations, 15% expect to earn over £30,000 per year in their first job, and on average the capital's students expect a first salary of £20,656. The view of those at Welsh universities is more pessimistic, expecting average salaries of just £16,852.

Commenting, Sue Harper, head of Student Banking at Halifax, said: "These results show just how much debt students are building up while studying. These are significant sums for anyone let alone someone who is not yet working full-time.

"Our advice to students is to budget carefully and to shop around for the best financial deals. The difference between the most generous interest-free overdrafts and the most expensive could be worth several hundred pounds over the course of your studies."