Press Room

Student Money Matters

(14th August 2007)

Level of Graduate Debt Drops for First Time in Six Years

After a clear trend of rising debt, this year the 2007 NatWest Student Money Matters survey reveals that the average graduate debt has dropped for the first time in six years. Graduates who leave university with debt now owe on average £12,363, a decrease of £889 (6%) on 2006. This shift is also reflected in the percentage of graduates leaving university with debts of over £10,000 which has fallen to 54%, 8% less than in 2006.

The average starting salary has risen this year from £13,860 in 2006 to £14,515 in 2007, though for 41% of graduates this was less than they were expecting. In addition, more graduates (27%) did have a job confirmed on graduation (up from 23% in 2006). Despite some expecting higher starting salaries, 47% of graduates claim that they gained a good career, 42% are now totally independent from their parents and 34% claim to have a healthier bank balance.

Just over half (54%) of current students questioned admitted to being concerned about the amount of debt that they might owe on graduation. However, the prospect of graduating with debt had only made 23% actually consider dropping out to pursue a full time job.

New Students Expect To Pay £34,740 To Get a Degree

With exam results just days away and the new university fee structure coming to the end of its first year, the NatWest Student Money Matters survey also reveals that sixth formers starting university this year expect to pay on average £34,740 for a three-year degree course. This is up from £33,512 last year and includes the new tuition fees. As a result those new students who expect to graduate with debt, predict that they will owe £14,841 on average after graduation. Despite these figures however, 73% of 2007’s intake believe that going to university will help them with their future job prospects and 51% wanted to use the opportunity to train for a specific career such as medicine or law.

Reflecting the fact that most students are anticipating greater levels of debt when they graduate, 72% of those heading off to university this year and expecting to graduate with debt, are already worried about the amount of debt they will have. 73% also feel concerned about the recent increase in fees as a result of the introduction of top up fees.

For sixth formers starting university this summer, 41% feel that they are financially prepared for going to university, however for most Freshers their biggest concern is money being tight (66%). Worrying about finances continued to outweigh concerns about the educational aspects of university, as only 54% were concerned about things such as failing their exams.

Students Still Dependent on Part Time Work

In line with findings from recent years, students are continuing to rely on part time jobs to finance their university life. A massive 82% of this year’s intake believes that they will have to get a part time job and 44% of current students have to rely on their income from term time work to get by, working an average of 15 hours a week. Current students supplement their income by an average of £84.70 per week. The pressure of having to earn money continues to have an impact on students’ studies, with 34% admitting they had skipped lectures because of their part time job, this figure is slightly up on those respondents in 2006.

Parents Footing The Bill

Despite part time work remaining a necessity for some students, the good news is that almost two thirds of parents help finance their children’s university education. 26% get regular amounts throughout the term, 23% get money from their parents as and when they need it, 8% get a lump sum at the beginning of each term and 4% got a one off amount when they started university.

Mark Worthington, Head of NatWest Student and Graduate Banking, said: “Anticipated debt and the recent increase in tuition fees is clearly going to impact how students manage their finances, however thankfully new students seem to be much more aware about the financial realities of university and are trying to prepare themselves accordingly. Despite the anticipated cost of university continuing to rise, students are taking steps to supplement income and budget their spending and it is encouraging to see that the graduate debt figure is actually down for the first time in six years.

“University really plays a huge part in shaping a person’s future life, giving them not only educational advantages but also teaching them valuable life lessons. Parents helping to support their children through university make the financial commitment as an investment in their future, and as such there are long-term rewards. "

To help students understand how university funding affects them, NatWest has developed a handy guide to student finance. The guide covers Government Support and the finance available from banks and the Student Loans Company and aims to remove confusion around the financial aspects of university for parents and students alike.

Notes to Editors:

Weekly spending figures (Based on 8 month term time plus three years tuition fees at £3,000 per year):

• Mark Worthington, NatWest Head of Student and Graduate Banking, is available for interview.
• Case studies are also available on request.
• Research carried out by Virtual Surveys Limited in May 2007.
• 1,364 Graduates, 1,104 Students and 1,020 sixth formers considering going to university were surveyed.

Media Enquiries:
Tel: 020 7 672 1927
NatWest Media Relations
mary.taylor@natwest.com