Skip to main content

Graduates: Debt

Volume 468: debated on Monday 26 November 2007

To ask the Secretary of State for Innovation, Universities and Skills with reference to the answer to the hon. Member for Reading, East of 3 September 2007, Official Report, column 1756W, on graduates: debt, (1) what assessment he has made of the effect of course choice on the average amount of time needed by (a) male and (b) female students in higher education to repay debts incurred during study; (166899)

(2) what assumptions about (a) the gender pay gap, (b) fertility, (c) nuptuality, (d) real earnings growth and (e) graduate income premium he made in estimating the average amount of time needed by graduates to repay debts incurred during study by (i) men and (ii) women.

We estimate that a male student who entered higher education in 2006/07 will take an average of 11 years to repay their student loan. We estimate that this will be 16 years for a female. These periods are counted from the statutory repayment due date, which is the April following the year of graduation.

The calculations are based on assumptions about graduate lifetime earnings, derived from the British Household Panel Survey and the Labour Force Survey. The calculations therefore take account of earnings growth due to career progression, gender, age and periods spent unemployed or inactive for other reasons such as having children. Real earnings growth for the graduate population as a whole is assumed to be 1.95pp above inflation.

Separate analysis of the benefits of higher education estimates that over the working life, the average net graduate earnings premium is comfortably over £100,000 in today's valuation, compared to what a similar individual would have earned if they just had A- levels.