More than 500 graduates now owe at least £200,000 each after taking out student loans, compared with five years ago when no one had that level of debt with the Student Loans Company.
Figures obtained by The Observer through a freedom of information request reveal the growing numbers of students accumulating the very highest levels of liability.
In total, 8,225 graduates have debts of £150,000 or more. Five years ago that number was 15. The number of people with student debt in excess of £200,000 has increased from zero to 561 in the same time – enough to fill a typical Airbus A380 – and tripled in the past year.
Loans are increasing in size because they are accruing interest faster than graduates are paying them off. Students in England and Wales who started university in September 2012 on the plan 2 loan system paid tuition fees of £9,000 – triple the rate of students who started the year before – and took out loans with an interest rate of the retail price index plus 3% (higher than previously). In 2016, maintenance grants for low-income students were also replaced with further loans.
These changes, plus longstanding rules which allow students to apply for additional funding if they repeat a year or take lengthy courses such as medicine, dentistry and architecture, mean student borrowers are racking up debts that, in effect, would have been impossible just a few years ago.
Poppy Young began studying her public relations BA in 2016, four years after the introduction of plan 2 loans. A change in university from Bournemouth to London, the effects of ADHD, and the death of a close friend towards the end of her studies meant Young took eight years to finish her degree and appealed for extra funding to complete it. Now 29, she has a debt of £159,973.47 – triple the £53,010 average for graduates entering repayment in 2024-2025.
Young, who was brought up in a single-parent household and was in receipt of a maintenance loan, says each interruption to her studies created a “sunk cost” effect – pushing her to borrow more to complete her degree so she had something to show for the six-figure burden. She believes she was not ready when she started it aged 18 and that students are encouraged to go to university too early.
“I’m glad I got to see it through, I just think [the delays] wouldn’t have been necessary had I been better informed and prepared to take the degree in the first place,” she said.
The government has promised to publish a plan for higher education reform by the summer. In the meantime, policymakers are attempting to unpick the causes of ever-growing balances.
Plan 5 loans, which replaced plan 2 in 2023, have interest rates capped at RPI, a measure understood to be designed to combat extreme levels of debt. The government is capping plan 2 interest rates at 6% in England, and has reintroduced targeted maintenance grants – meaning low-income students borrow less while they study.
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A foundation year and a retake due to mental health problems meant Anna Lawes, 30, spent seven years instead of the standard five studying veterinary medicine at Nottingham. Her loan balance sits at £150,938.64.
Foundation years, taken by students who have not met traditional requirements for a course before the first year of an undergraduate degree, quadrupled in popularity between 2016 and 2025. They widen access to courses such as medicine but can lead to increased debt.
“Going into it, I didn’t really know anything about it. I was one of the first in my family to go to university, we didn’t have a huge amount of information,” said Lawes. With an eight-month-old baby, Lawes, who graduated in 2021 and is currently on maternity leave from her job as a vet for a university, sees her debt as a tax, but will feel the impact of the £200 taken from her salary each month when she returns to work.
Higher balances do not mean higher monthly repayments. Those with plan 2 loans pay back 9% of earnings above £29,385 and have their debts written off after 30 years.
Henry Parkes, principal economist at the IPPR thinktank, said: “The reasons why people might be in that situation are beyond their control, and that does feel unfair. I can see how it’s an additional level of unfairness over a system that is already not brilliant,” said Parkes. The problem of extreme balances caused by changes to the loan system was “coming to roost,” Parkes said. “As time goes on, you’ll see a lot more people, probably, owing those amounts.”
A Department for Education spokesperson said: “These balances are not typical of the vast majority of graduates, but it is important that students can be confident the significant investment they make in higher education delivers real value for money.
“Since being elected, we have supported the aspirations of people from all backgrounds who want to go to university or college, including by reintroducing targeted maintenance grants.”
Photograph by Alamy