Remortgaging a property is one strategy for handling expensive repayments, as is accepting low-paying jobs or taking on a second job.
Many UK graduates earning moderate salaries are quitting their jobs or are experiencing declining promotions in their sectors, plagued by staff shortages like teaching and healthcare because they can no longer afford student loan repayments. People responding to an online callout or sharing their experiences in interviews say that they are delaying their attempts to progress in their jobs because of loans totaling up to £120,000, many of which rising interest rates have inflated.
They claimed that in addition to the negatively impacting their mental health and intentions to start a family, the repayment made purchasing a house considerably more difficult or impossible.
Some said they had chosen to work minimum wage jobs instead of applying for higher-paying jobs, even though they had degrees in highly sought-after courses; others said they had left or not applied for highly-paying jobs because of the higher loan repayments that would have resulted in having to pay a 40% income tax rate.
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Olivia, a 30-year-old project manager, said she accepted a lower-paid position to reduce a monthly repayment of £350, which she found challenging to afford. Her debt, which was £68,000 when she graduated, has increased to nearly £75,000. She stated, “Combined with the lower tax rate and repayments, I am better off financially.”
Lucy, from Shenfield, Essex, was the first in her family to attend university. She earned a math degree in 2007. She also had a brief stint in graduate employment as a private equity investor and a transport planner. Despite her £20,000 annual salary, she has felt burdened by her student loan debt. When she was 25, she returned to her parents’ house and worked part-time minimum-wage jobs. She has worked as a taxi controller for six years, making £19,000 in revenue last year.
She said: “My student debt makes me not want to earn more, as my equivalent rate of tax would be 38%.” “I see not repaying my loan as an act of defiance.”
Claire, an NHS dietitian from Cheshire, was one of the numerous women who disclosed that they were taking out loans to pay off their student loan debts. Claire owns roughly about £20,000, but since 2019, she has been repaying the debt with a payment of roughly £300 per month. She stated, “I’d assumed the debt was coming down but I’ve discovered I’m barely covering the interest.” “As my payments will go up with any pay rise I get, I’ve decided to pay off my loans with [a] remortgage.”
Claire works 37.5 hours a week at her main job and 7.5 hours at a second job because various jobs are assessed individually for student loan repayments. This does not mean she will be mortgage-free until she is 73 years old. She said, “It seems drastic,” “but it makes sense to escape this tax that I’d pay forever otherwise.”
Several individuals, below-average and middle earners felt that switching their careers to higher-paying fields like business, banking, or IT was the only way forward.
Even though some professionals, like doctors and lawyers, realized they would likely earn less money in a non-graduate position without a degree, many felt compelled to repay loans from stagnating graduate wages, which have lost purchasing power since the cost-of-living crisis over the past few years.
