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Just 26% of students and 13% of graduates expect to pay back their student loan

22 July 2019

AIC releases new research on student debt.

Nine in ten students have a student loan or plan to have one, but only 26% think they will be able to pay it back in full, according to research from the Association of Investment Companies (AIC) conducted by Opinium Research. The figure is lower among graduates with a student loan, with only 13% expecting to clear it within the 30-year period before it is written off.  

University students and those planning to go to university, expect to graduate with an average debt of £41,697. This is lower than the Institute for Fiscal Studies (IFS) estimate that the average student will graduate with debt of more than £50,0002.

But students’ expectations are realistic compared with parents’, who think that their children will graduate with an average £24,145 of debt – less than half the IFS estimate.

Most of those who have already graduated (54%) report that their debt is roughly what they expected. However, more than a third (35%) graduated with more debt than they expected, and among these, the average overshoot was £5,900.

Help with university costs remains the top financial priority for 48% of parents, with help towards a first home coming in second (34% of parents). Among students, that gap is narrower, with 43% prioritising help from their parents towards university costs and 39% preferring help with buying a first house.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Despite the high costs of going to university, it’s still a key aspiration for many parents and students. Parents are prioritising helping their children with university costs over helping them to buy a first home, and students agree university is the higher priority.

“However, parents are underestimating just how much debt their children will leave university with. Their estimates of debt on graduation are wide of the mark whether you compare them to students’ own estimates or graduates’ experiences.

“Our research also suggests that despite low interest rates, cash accounts remain the most common way for parents to save towards their children’s future. Those with younger children, who have time on their side, might consider investing in the stock market for long-term growth. Over the past 18 years, investing £50 a month in the average investment company would have grown into £32,721, covering most of students’ expected debt on graduation.”

Funding children’s futures

Nearly two-thirds of parents (65%) are planning to help their children with university costs or do so already. Not surprisingly, wealthier parents are more likely to help, with 69% of parents from social grades ABC1 expecting to be able to meet some university costs compared with 54% of those from grades C2DE. Single parents are much less likely to contribute (48%) than those who are married (69%).

Parents are much more likely to tuck money away in cash savings accounts for their children’s future than to invest it in the stock market. Some 62% of parents have used cash accounts, compared to 13% who have used investment companies, 13% who have invested in shares, 8% who have bought property and 7% who have used unit trusts or OEICs.

Will students ever pay back their debt?

Among current university students and those planning to go to university, just 26% think they will be able to pay back their student loan in full. In contrast, 38% think that they won’t be able to pay it back, while the remaining 36% are unsure.

Men are more confident than women of being able to pay back their loan, with 34% of men with a student loan expecting to do so compared with 23% of women. Also more confident are students from Scotland, with 52% expecting to make a full repayment – probably not surprising given that university tuition is free north of the border.

Those students who anticipate they will be able to repay their loan think it will take an average of 14 years to pay it off.

Among graduates, only 13% who have taken out a student loan think they will ever repay it in full, with 62% thinking they won’t and 24% unsure. Barely half of graduates who have a student loan (53%) understand how the interest on their student loan is calculated, and fewer than a quarter (24%) know the interest rate they are being charged.

Monthly investment in the average investment company to 30 June 2019


5 years

10 years

18 years

£25 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)






5 years

10 years

18 years

£50 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)






5 years

10 years

18 years

£100 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)




Source: AIC/Morningstar


Saving for children hub

The AIC has an online saving for children hub to help investors find out more about saving for children with investment companies over the long term. There is a video, ‘Saving for your children’s future’, a ‘Saving for children’ guide, six tips on saving for children and a jargon buster. 


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  1. The research was completed by Opinium Research on behalf of the AIC from 2nd July to 10th July 2019. The parents research from 2nd July to 9th July consisted of 1,000 online interviews of parents with children who have gone/expect their child to go to university. The student research from 2nd July to 10th July 2019 consisted of 1,001 students who are planning to attend university or are currently at university. The graduate research from 2nd July to 9th July consisted of 201 graduates who have completed their degree in the last 5 years.
  2. Institute for Fiscal Studies (July, 2017), Higher education funding in England: Past, present and options for the future, Source:
  3. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 360 members and the industry has total assets of approximately £193 billion.
  4. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580

Elmley de la Cour
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