How to avoid student debt

The higher salaries earned by some graduates because they have a degree will be wiped out by the debts they rack up, a report says today.

The £3,000 annual cap on tuition fees is expected to be lifted after a review next year.

This means the average graduate is likely to end up owing more than £25,000 in tuition and maintenance fees, the National Union of Students(NUS) report estimates. The debt could be £37,000 for those attending a leading university in an expensive city.

Students taking some subjects - particularly arts - may end up with a degree that will bring absolutely no financial reward, the research gives warning.

Ministers have trumpeted the “graduate premium” - the additional amount students can expect to earn over their lifetime because they have a degree.

While medicine graduates will take home £350,000 extra during their career, for arts graduates it is just £35,000 - only a few thousand pounds more than they would end up paying back in loans, once interest is taken into account.

In humanities the lifetime premium is £51,000; in linguistics, £72,000; agricultural sciences, £82,000; and architecture £195,000.

The report’s authors said experts had predicted the annual tuition fee cap would probably rise to £7,000 - creating competition with some universities charging the full amount and others undercutting them.

Their figures indicated that the average graduate in an arts subject, taking up an average debt, would earn a net premium of less than £5,000 during their career. For humanities graduates it would still be just £15,000.

The report said: “If an arts student took up a place at a London institution, paying average fees but taking up the maximum loan entitlement for maintenance, this student’s total public debt on graduation would be around £35,000.

“It is obvious that they could expect to receive a negative premium - in other words they would obtain no financial benefit from higher education whatsoever.

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