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Fear of debt really is deterring the poorest from university

The current government’s argument that student loans widen participation is misleading, argues Claire Callender, whose new research finds that debt aversion is stopping the poorest from applying to university.
This article is more than 6 years old

Claire is professor of higher education policy at Birkbeck and professor of higher education studies at UCL Institute of Education.

A return to tuition-free higher education and student grants in England, contained in various political parties’ election manifestos, has been dismissed as unrealistic and too costly.

But there seems to be little consideration of alternatives to the current funding system – a system that helps to perpetuate the UK’s position as the country with the lowest social mobility and the highest income inequality in Europe.

The English student funding system is predicated on debt accumulation to the detriment of the poorest, and debt is a feature of student finance in all four UK nations. They are the students who will be graduating with the largest student loan debts, now that grants for full-timers have been abolished. And, according to new research, they are the students most likely to be deterred from applying to university because of fear of debt.

Think again

For those who argue that rising tuition fees and increasing student loan debt have no impact on higher education participation – think again. Money does matter.

First, between 2010 and 2016 there was a 61% fall in part-time undergraduates following the 2012/13 fee rises and the introduction of loans for part-timers. The decline is primarily because only a minority of potential students qualify for loans, so the majority are faced with far higher fees that they have to pay out of their own pocket. For those who do qualify for loans, the loans are unattractive, and take-up has been far lower than originally predicted.

Second, the abolition of NHS bursaries in England for undergraduates wanting to study nursing and other subjects allied to medicine means that these students now have to take out loans to cover their tuition fees and living costs. It is no coincidence that the large falls in UCAS applications for these full-time courses have coincided with the scrapping of free tuition and grants. The latest UCAS figures for March 2017 show a 23% drop in applications.

Third, a study published last week that I co-authored with Geoff Mason shows that fear of debt is deterring poorer students from going to university. Our study looked at changes in young people’s attitudes towards student loan debt between 2002 and 2015 in England. We found that the current system disproportionately limits opportunities for young people from poorer backgrounds.

Surveying debt aversion

The backdrop to our study was a series of student funding policy changes in England. Between 2002 and 2015, they led to a steep rise in tuition fees (up by 553% after allowing for inflation) and escalating debt on graduation (up by 256% after allowing for inflation). All the changes were based on the assumption that higher education is primarily a private rather than a public good – that the key beneficiaries are students/graduates, rather than society as a whole. Consequently, if students want to go to university, they have to borrow. In 2015, 93% had taken out loans for fees and 89% for maintenance.

We surveyed over 1,000 17-21 year olds in 2002 and 1,500 in 2015. All were studying towards university entry-level qualifications in state and independent schools and at further education colleges in England.

We found that young people are more willing to take on student loan debt than previously, and see borrowing money for a degree as a good investment. They also understand how income-contingent loans work: that repayments are linked to their earnings and that the loans do not need to be repaid until they are earning above £21,000 a year. So they are fully aware that student loan debt is not like other forms of debt. Yet around a third of the students strongly agreed with the statement “I would worry a lot if I ever got into debt”.

We found that debt aversion has increased among working-class and middle-class students. In addition, debt aversion is much stronger among poorer students than their wealthy peers, and more so now than in the past. Significantly, our findings show that fear of debt is more likely to deter young people from a poorer background from applying to university.

Complacency on debt and access

Lower school grades are the main – and often cited – reason that those from disadvantaged backgrounds don’t end up going to university. Yet it is not enough for policymakers to focus solely on school achievement. Student funding and fear of debt play a role in socio-economic inequalities in access to higher education. When we compared poorer and richer students with similar GCSE results, accounting for differences in gender, ethnicity and school type, we found that a lower percentage of poorer students had applied to university (85%) compared to their wealthier peers (89%) because of debt fears.

With few alternative options and an uncapped supply of university places, a university education has become the norm for students with A-levels or equivalent qualifications. As a result, the number of people attending university has continued to rise, and this is also the case among disadvantaged students. Yet policy makers are misguided if they believe that because of this growth, the rise in tuition fees and student loan debt have no influence on university enrolments, especially among disadvantaged groups.

Many potential students, particularly the poorest, do not feel that student loans are affordable, or a safety net against an uncertain future, despite understanding how the loans work. For these young people the idea that student loans are not really debt does not ring true.

More people than ever are attending university, including those from disadvantaged backgrounds. But this should not be a reason for complacency. Government figures suggest that the poorest 40% of students can now expect to leave university with the largest debts of £58,815. Our research shows that this will have a negative impact on social mobility, as a proportion of students from poorer backgrounds continue to be put off gaining a degree by fear of debt. This year’s rise in tuition fees and the abolition of NHS bursaries for nurses and others will only worsen the situation.

The current government’s argument that student loans widen participation is misleading. Our study shows that a student funding system reliant on fees and loans, regardless of whether debt is repaid or written off by the state, discriminates against those it claims to help.

3 responses to “Fear of debt really is deterring the poorest from university

  1. Your research paper explicitly says

    “A key limitation of our study is its focus on prospective students’ intentions about entering higher
    education. The analyses do not show the impact of debt on prospective students’ actual behavior,
    choices, and decision making. The relationship between attitudes toward debt and actual debt is
    unclear. We cannot assume that attitudes towards debt affect borrowing behavior” (page 29)

    The HESA data clearly show that, since 2012/13, the percentage of students who come from low participation neighbourhoods at university has risen from 10.9% to 11.3% (

    1. Thank you for this point!

      All the reporting on this, and the representation made here, suggests that the paper makes a finding on actual behaviour, when it clearly does not. It may be the case that attitudes towards debt are deterring some students from applying to University, but such a finding would need to be explained in the context of rising numbers of students attending from LPNs (as you reference above).

      I may worry about planes dropping out of the sky whilst I’m on them, but it doesn’t stop me getting on them to go on holiday. Arguments such as the one made in this article distract from the more serious issues around participation (part-time student numbers, progression and post-University employment opportunities, pressures of term-time employment for the less well off, etc.).

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