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Sarah Pennells reports
"It can take tstudentsyears to get their finances sorted out."
 real 56k

Monday, 27 November, 2000, 15:00 GMT
Higher education, larger debt
Students face more than one test.
Overhanging student debts can make it difficult to take out a mortgage
Student loan statistics released by the Department for Education and Employment will show how much students borrowed over the last year, and how much they have paid back since graduation. The BBC's Sarah Pennells reports.

Students are leaving higher education with an increasing amount of debt, more so since tuition fees were introduced in England and Wales.

Financing their time at university is certainly an issue for students. But dealing with their debts once they graduate can be more difficult.

Nicola Chapman studied accounting and financial management at university, so she certainly should know about dealing with money.

Brooks Duke, National Union of Students
Brooks Duke: "Debt has increased to 14,000"

But she could not survive without taking on debts. And when she graduated two years ago, she had four student loans and a bank overdraft.

"It is hard to start to pay debts off because you have such massive outgoings and what is left out of your income is very little," she says.

The amount of debt students are incurring is increasing, particularly since the introduction of tuition fees in England and Wales.

Once they graduate, students have to work out how they'll pay back the debt they've accumulated during their studies.

Brooks Duke from the National Union of Students explains the situation:

"Since the introduction of tuition fees and the abolition of maintenance support, graduate debt has increased from an average of 10,000 to 14,000."

In addition there are the other loans that students take out with banks and any extra overdrafts they may have.

"So we are looking at an average of 14-16,000 for every graduate," he says.

Because students graduate with thousands of pounds of debt, it can take them years to sort their finances out.

The problem is that paying off these debts may not be priority for graduates, who could be trying to find a job or simply trying to make ends meet.

Many graduates don't realise the impact of their existing debts until they need to borrow more money, especially if they are thinking of taking on a mortgage to buy a house or a flat.

"Part of the problem is that they are in the habit of being in debt," says Tyrone Silcott of Independent Financial Advisers, Everett Macleod.

"If students want to borrow money for something more constructive, the debt that they already have is counted against them and it means that they can borrow less than they ordinarily could."

The advice is to pay off debts as soon as you can, and make sure you clear the most expensive ones first.

That means credit cards and bank loans.

But as an increasing number of students are discovering, surviving student years is not necessarily the hardest financial challenge they face - it is dealing with the debts afterwards.

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