Most graduates in the UK will still be paying off student loans into their 50s, and three-quarters will never clear the debt, a new probe has found.
The Institute for Fiscal Studies (IFS) report said that initial gains made by poorer students in the 2012 shake-up of the tuition fees system have been more than wiped out by subsequent changes.
The reforms brought in by the then coalition government originally saw the lowest earning third of graduates better off by £1,500, but replacing maintenance grants with loans sent debt rates soaring.
The changes resulted in students from low-income families graduating with the highest debt levels of more than £57,000.
Expected repayments from the lowest-earning third of graduates have increased by about 30% since 2012, while repayments by the richest third rose by less than 10%.
“The combination of high fees and large maintenance loans contributes to English graduates having the highest student debts in the developed world,” the report states.
The probe said that interest rates on student debt were “very high”.
The average student who borrows £45,000 ends up paying another £5,800 in interest, while higher earners may have to fork out £40,000 in interest repayments, the IFS found.
“There is a risk that better-off parents will pay fees up front, especially if they think their offspring will be high earners. This would increase the cost to government in the long run,” the study said.