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4. HIGHER EDUCATION STUDENTS' DEBT AND SAVINGS

Introduction

4.1 This chapter reports the debt and savings of HE students from the main survey. As with the other HE students' chapters on income and expenditure, the data in this chapter is disaggregated by part-time ( PT) and full-time ( FT) students, with the latter also distinguishing between FTHE sub-degree and FTHE degree. The data for these two levels of students are then combined to provide FTHE Combined figures. As with the previous chapters on HE students' income and expenditure, this chapter contains quotes drawn from the interviews with students from working class backgrounds. Note, again, that these quotes are included to be illustrative rather than representative.

4.2 Debt is calculated from the balance which the students expected to have outstanding on study-related loans, commercial debt (loans, overdrafts and credit cards) and informal loans at the end of the academic year in which the survey was carried out ( i.e. 2007-08). It is not therefore strictly an annual or even term-time figure but the accumulated debt at this stage in their academic career. We do not have details of debt at entry to study but it might be assumed that the typical student would not embark on their studies with a significant amount of debt unless they had progressed from a sub-degree course such as an HNC or HND.

4.3 Before presenting the results of the analysis, it should be remembered that, as outlined previously in Chapter 2:

• No distinction is made in the analysis between HE students attending universities and colleges since their method of funding is the same.
• With some exceptions, means are calculated across all students.
• The precise definition of each variable can be found in the Technical Appendix.

HE Students' Debt

4.4 The first set of tables provides headline debt figures for each of the four types of students: FTHE sub-degree, FTHE degree, FEHE Combined and PTHE. They provide figures on total debt and the main sources of this debt.

Table 4.1: Total and types of debt by level of study

Table 4.2: Total and types of debt ( FTHE Sub-degree)

Table 4.3: Total and types of debt ( FTHE Degree only)

Table 4.4: Total and types of debt ( FTHE Combined)

Table 4.5: Total and types of debt ( PTHE)

4.5 Table 4.1 shows that mean total debt for FTHE Combined students is £4987. Distinguishing amongst full-time students, degree only students have a level of debt considerably higher than that of sub-degree students (£5223 versus £4152, or 25% higher). Comparing full-time and part-time students, full-timers have an average level of debt which is higher than that of part-timers (£4987 versus £4278, or almost 17% higher).

4.6 For all full-time students, most debt occurs from study-related sources ( i.e. student loan balance) (Tables 4.2, 4.3, 4.4, 4.5). This debt is 1.5 times higher than that from commercial sources for sub-degree students and over 3 times higher for degree only students. Overall, for full-time HE combined students, study related debt comprises almost 70% of all reported debt. Debt from commercial and informal sources comprises 25% and almost 5% of total debt respectively for these students.

4.7 For part-time students debt composition is different (Table 4.5). For these students, most debt is from commercial sources; this type of debt comprises over 90% of total PTHE students' debt. Study-related and informal sources of debt comprise 6% and less than 1.5% of these students' debt respectively. (Remember that there are restrictions on part-time students' loan eligibility.)

Table 4.6: Total and types of debt for those who have debt ( FTHE Sub-degree)

Table 4.7: Total and types of debt for those who have debt ( FTHE Degree only)

Table 4.8: Total and types of debt for those who have debt ( FTHE Combined)

Table 4.9: Total and types of debt for those who have debt ( PTHE)

4.8 Tables 4.6 to 4.9 are based on those students who reported debt, rather than on all respondents irrespective of whether they had debts. In each category total debt is higher with study related debt being highest in all of the full-time categories and commercial debt being highest for part-timers.

Table 4.10: Total debt by student characteristics and level of study

4.9 Tables 4.10 presents the total debt for all HE students across a range of personal characteristics: sex, age, social class, and whether or not these students had; a family member who had studied at university, dependent children; lived with their parents.

4.10 Amongst the full-time students overall ( FTHE Combined), the types of student with the highest mean total debt are mature students and those with dependent children. These two types of students are not, of course, mutually exclusive.

4.11 Amongst part-time students, students with dependent children have the highest total mean debt. Again, higher debt amongst part-time students occurs for mature students and, as with full-time students, the relationship is likely to be closely related to having dependent children.

4.12 There is little difference between male and female full-time HE students in relation to mean total debt. Part-time female HE students, however, have a higher mean total debt level than male part-time HE students.

4.13 Mature full-time HE students ( FTHE Combined) have a substantially higher mean total debt than younger students; over 1.5 times higher than that of students aged 21-24 years and over 4 times higher than that of the youngest students (16-20 years). Mean total debt also increases with age amongst part-time students and with a substantial leap of difference between the youngest students and those students aged 21-24 years and above.

4.15 Working class full-time HE students have an average of £5607 total debt. Middle class full-time HE students have an average of £4378 total debt. The former therefore have mean total debt level nearly 30% higher.

4.16 Those full-time HE students who had a family member who studied at university had considerably higher mean total debt than those students with no family member having studied at university (£4654 versus £1406 or more than 3 times higher).

4.17 Full-time HE students with dependent children had debts of £13,110 or nearly 3 times higher than students with no dependent children.

4.18 Unsurprisingly, full-time HE students living with their parents had lower debts that students not living with their parents (£3171 versus £6425 or over 50% higher).

4.19 It is noteworthy that, in general, degree students are accumulating more debt than sub-degree students at all stages. In general, amongst full-time HE Combined students, older, working class students, those students with a family member having studied at university, with dependent children and living with their parents have higher mean total debt. For part-time students most total debt occurs with: age, having no family member who has studied at university, having dependent children and not living with parents.

Table 4.11: Total debt by year and level of study

4.20 Table 4.11 continues to examine students' total debt, now by level and year of study. Whilst the mean total debt for all FTHE students ( FEHE Combined) is £4987, the mean total debt figures by the end of year four for these students is much higher (£7664).

4.21 Within these figures, levels of debt rise steadily as study progresses for both sub-degree and degree only students. However, sub-degree courses tend to last for one or two years and therefore the figures relating to years 3 and 4 are based on small numbers and may include those who have had to repeat years. Nevertheless, some sub-degree students will progress to degree level courses and will begin these studies with substantial debt.

4.22 It is also worth noting the pattern of debt among medical and dental students as they follow longer courses and have less opportunity to work during the summer. Among fifth year medical students total mean debt was £16,899 (median £19,876). Around 80% of this debt was student related rather than commercial.

4.23 The figure of £4278 for part-time HE students remains constant as no analysis of these students by year of study was undertaken because of the huge variation in time taken to study part-time.

Table 4.12: Study-related debt by students' characteristics and level of study

4.24 Table 4.12 describes the study-related debt of HE students across the same range of personal characteristics: sex, age, social class, and whether or not these students: had a family member who had studied at university, had dependent children, or lived with their parents.

4.25 Amongst the full-time students overall ( FTHE Combined), the types of student with the highest mean study-related debt are mature students and those with dependent children. These two types of students are not, of course, mutually exclusive.

4.26 Mean study-related debt amongst part-time students is low in comparison to full-time students across all personal characteristics.

4.27 Amongst part-time students, students in the 21-24 age brackets have the highest mean study-related debts.

4.28 There are no notable differences in the mean levels of study-related debts between the sexes for both full-time and part-time HE students.

4.29 Study-related debt appears to be much higher for the older age groups amongst full-time HE students but that will, of course, also be related to the year of study and the presence of children which are also factors related to taking out higher student loans. The picture is less clear for part-time HE students; here students in the 21-24 years old bracket have highest mean study-related debt. The youngest students (16-20 years) have higher study-related debt than mature students. It must be kept in mind that the number of responses in the younger age groups is small (50 aged 16-20, 58 aged 21-24 and 412 aged 25+).

4.30 For both full-time and part-time HE modes of study, students from working class backgrounds had the higher level of mean study-related debt. For full-time HE Combined students, the average figures for working class and middle class study-related debt are £3946 and £2939 respectively - that is, students from a working class background have mean study-related debt levels one-third higher than students from middle class backgrounds. Full-time HE students whose parents work in elementary occupations have the highest study-related debt by occupational variable, indicating that these students draw more on the student loan. This finding may not be surprising since students with parents in those occupations may receive less in the way of formal and informal financial support from their parents and be forced to take out higher loans.

4.31 Those full-time HE students who have no family experience of university also appear to have higher mean study-related debt. One possible reason is that this lack of family history of HE is acting as a proxy for lower socio-economic status. Little difference exists amongst part-time HE students in this respect.

4.32 Those full-time HE students with children are also more likely to have higher study-related debts: twice as high as for students without dependent children. However, part-time HE students with no dependent children have slightly higher study-related debt.

4.33 Those HE students not living with parents are accessing student loans to a greater degree: £4438 for FTHE students not living with parents and £2206 for those who do live with parents; so study-related debt is almost twice as high. There is little real difference between part-time students' debt in this respect.

4.34 In general, the mean study-related debt levels of part-time students are much less than those of full-time HE students. This finding is not surprising given that part-time students have lower loan eligibility. The type of FT students ( FTHE Combined) with the highest debts tend to be female, mature (25 years old and above), working class, who no family members having studied at university, with dependent children and not living with parents. The type of PTHE students with the highest debts tend to female, aged 21-24 and working class.

Table 4.13: Study-related debt by year and level of study

4.35 Table 4.13 continues to examine the same study-related debt, now by level and year of study. Using the full-time HE Combined students' data, the average amount of study-related debt for full-time students is £3467 for and £277 for part-time HE students.

4.36 Mean debt levels rise for all students throughout the period of study, rising sharply from 1 ^st to 2 ^nd year of study, and then tailing off in the final year. For full-time HE Combined students, for example, mean debt rises year on year by 92% (year 1 to year 2), 52% (year 2 to year 3) and then 25% (year 3 to year 4+).

4.37 By their final year of study, the mean level of debt is £6100 for full-time HE students ( i.e. the HE Combined students) with a wide disparity between sub-degree students with a debt of £6580 and degree students with a debt of £5964. In studying HE, the debt of the sub-degree students at this stage is therefore 10% higher than that of degree students. (Again, however, the number of fourth year responses is low for sub-degree HE students - most leave after two years of study at which point debt is £3080.)

Table 4.14: Commercial credit by student characteristics

4.38 Tables 4.14 and 4.15 examine commercially-sourced debt, from banks for example; firstly by students' characteristics again and then by level and year of study. Amongst full-time HE Combined students, highest commercial debt exists for students with dependent children and those who are mature. These two types of student, however, are likely not to be mutually exclusive. Amongst part-time HE students, those with dependent children also have the highest level of mean commercial debt.

4.39 There is little difference between the sexes in terms of their commercial debt position amongst full-time HE students. Amongst part-timers, however, female students have a commercial debt level over 20% higher than that of males.

4.40 For full-time HE students, commercial debt rises sharply with age. Mature students' commercial debt is twice as high as that of students aged 21-24 and 7 times higher than that of the youngest students. Amongst part-time HE students there is a similar picture. Those students aged over 25 years have the highest commercial debt - over four times higher than that of the youngest students and almost 50% higher than that of students aged 21-24.

4.41 For HE students who are defined as working class, the average commercial debt is £1452 for FT students and £3736 for PT students. The corresponding figures for middle class students are £1178 and £3909 respectively. Little difference exists for social class within modes of study therefore.

4.42 Not having a family member who has studied at university appears to increase both full-time and part-time HE students' level of commercial debt - by over 35% and just less than 50% respectively.

4.43 Having dependent children also increases the level of commercial debt for both full-time and part-time HE students - around 5 times higher and twice as high respectively.

4.44 Not living with parents also increases commercial debt levels for both full-time and part-time HE students - by nearly 60% and just over 60% respectively.

4.45 In general, for full-time HE students, mean commercial debt is higher for students who are older, working class, have had no family member studying at university, have dependent children and do not live with their parents. For part-time students, mean commercial debt is higher for students who are female, aged over 25 years, also have had no family member studying at university, have dependent children and do not live with their parents.

Table 4.15: Commercial credit by year and level of study

4.46 Commercial debt appears to rise only very slightly between the various year groups and for full-time HE it appears to decline in the final year (levelling for degree only students that year and dropping markedly for sub-degree FT students) (Table 4.15). This figure is perhaps influenced by the sharp decline in the 4 ^th year figure for sub-degree students and might benefit from further analysis.

4.47 Overall, full-time HE students ( FTHE Combined) have an average expected end of year commercial debt of £1284 but with a median of £89, suggesting a wide disparity in commercial debt.

4.48 Overall, part-time HE students appear to rely to a far higher extent on commercial debt than FTHE students but again with a high variation between PT students.

Table 4.16: Characteristics of those who do not have any debt by level of study

4.49 Table 4.16 describes the characteristics of students who have not reported having any debt. Debt free full-time students tend to be younger, middle class, living with parents, without dependent children and with a family member who has studied at university. Part-time debt free students were more likely to be female, over 25, without dependents, not living with their parents, from working class families and having a family member who studied at university.

HE Students' Savings

4.50 Respondents were asked about levels of saving accumulated. In the questionnaire for the main survey, students were asked how much savings they had at that point in time. As a result, it should be noted that it cannot be determined whether students are saving at the same time as accumulating debt or if they are saving in some parts of the year ( e.g. vacation time) and drawing down savings in other parts (term-time).

Table 4.17: Total savings by level of study

4.51 The mean savings figures are described in Table 4.17. The part-time figure shows a clearly higher level of savings than that of full-time HE students. However, there is a huge variance around all of these figures and their reliability and interpretation is not clear.

Table 4.18: Total savings by level of study for those who have savings

4.52 Restricting the analysis to those who have savings, amounts are obviously higher in all categories (Table 4.18). However, amounts remain highest for the part-time students and lowest for the sub-degree students.

Table 4.19: Total savings by student characteristics

4.53 Table 4.19 provides data on savings across all students by student characteristics. It shows that PTHE students who had a family member who had studied at university had most savings; HE sub-degree students with dependent children the least.

4.54 More widely, the table reveals:

• Male students typically have more savings than female students and PTHE students have much more savings than FT students - at least 2.5 times more for both sexes.
• Amongst the age groups, degree only students typically have more savings than sub-degree students. Amongst the FTHE Combined students savings decrease slightly with age, whereas amongst PTHE students mature students have considerably higher savings.
• Middle class students have higher savings than working class students amongst FTHE students, though the difference for the social classes amongst PTHE students is small.
• In terms of having a family member who has studied at university, again PTHE students have much more savings than FTHE students of all types. With the exception of sub-degree students, those students who had a family member who has studied at university have higher savings.
• Across FTHE students, those with dependent children have least savings - less than half for FTHE Combined students. The same pattern also exists for part-time students.
• Amongst FTHE students there was little difference in the level of savings amongst those who did and did not live with parents. However, PTHE students who did not live with their parents had more than 4 times the level of savings of those who did live with their parents.

4.55 Typically, therefore, PTHE students have more savings than FTHE students.

Table 4.20: Total savings by student characteristics for those who have savings

4.56 Not all students have savings; Table 4.20 describes the characteristics of those who do. The range of savings' levels varies widely, from a mean of £12,631 for part-time students with a family member having studied at university to a mean of £1785 for FT sub-degree students with a family member who has studied at university.

4.57 To summarise, male students tend to have higher savings than female students, except amongst part-time students. Among full and part-time students levels of savings tended to be higher among older students, those with dependent children (except amongst part-time students) and those living apart from their families. However, for full-time students higher savings were reported among the middle classes and those who did not have a family member who had been to university, while among the part-time students higher mean savings were reported among the working classes, those who had a family member who had been to university and had no dependent children.

Conclusions

4.58 The main highlights from the findings in this chapter are:

• Although commercial debt is significant, debts to the Student Loan Company represent the majority of borrowing for full-time students. Part-time students rely much more heavily on commercial loans.
• Among full-time and part-time students, mature students and those with dependent children have the highest level of total debt. Full-time students from working class families tend to have higher overall levels of debt than their middle class peers.
• For full-time students, commercial debt is higher for students who are older, working class, have had no family member studying at university, have dependent children and do not live with their parents.
• For part-time students, mean commercial debt is higher for students who are female, aged over 25 years, have had no family member studying at university, have dependent children and do not live with their parents.
• Debt free full-time students tend to be younger, middle class, living with parents, without dependent children and with a family member who have studied at university. Part-time debt free students were more likely to be female, over 25, without dependents, not living with their parents, from working class families and having a family member who studied at university.
• Levels of savings tended to be higher among older students, those with dependent children and those living apart from their families. For full-time students savings were highest among the middle classes and those who did not have a family member who had been to university, while among the part-time students higher mean savings were reported among the working classes and among those who had a family member who had been to university.

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