What will your student loan cost over your lifetime?
Research predicts how much you could end up paying back
The cost of a university education for students in the United Kingdom varies according to their home nation. Students from Scotland and Wales receive financial support when they go to university but no such support exists for English students, who pay the highest fees within the European Union.
The recent general election saw the Liberal Democrats obliterated by voters partly in response to their u-turn on tuition fees. In the run up to the 2010 election they had pledged to scrap tuition fees, but during their coalition government with the Conservative Party they oversaw an increase in fees for UK students from £3000 (€4120; $4717) a year to £9000 a year.
With this rise in fees, medical students are likely to be some of the worst affected because of the extended length of medical training. Until now the effect of higher fees has not been projected, but a recent study published in BMJ Open  looked at the lifetime impact of this increase in fees on English students borrowing to study medicine.
The lead authors of the study, Marco Ercolani, senior lecturer in econometrics, and Ravinder Vohra, clinical lecturer in general surgery, from the University of Birmingham, said: “We have calculated the lifetime debt facing the average medical graduate by looking in detail at the new rules and by using earnings data from UK population surveys.”
By using the average annual salaries for male and female doctors, the researchers calculated how much debt would be repaid on the basis of the fee system. They used data from the Labour Force Survey, undertaken annually by the Office for National Statistics, which collects employment data for 1% of the UK population. Medical graduates working full time were identified from the past two decades and the information was used to calculate average salaries by age and sex.
“We found that male and female medical graduates have very similar earnings to one another in the early years of their careers but that male salaries increase more rapidly,” they said. The data showed that by the age of 55, men were earning on average 35% more than women.
Using the estimations of average salaries, the researchers calculated repayments under the new tuition fee system of £9000 a year. Although the NHS bursary covers the cost of tuition fees for the final year, the amount borrowed for tuition fees alone for the other years gives an initial graduate debt of £39 945.69. With 3% interest, an average full time male graduate would repay this debt over 20 years, paying a total of £57 303. However, for a full time female graduate earning a lower salary, repayment would take 26 years. Despite having the same initial debt as their male counterparts, according to the research a female graduate can expect to end up paying £61 809.
The study also found that the total amount of debt on graduation can influence how much you end up paying back. In addition to a loan for tuition fees, students can also borrow money as a maintenance allowance to fund accommodation and living expenses. The study claims that this can add up to an eye watering £81 916 of initial debt if you study in London, live away from home, and take the maximum loan on offer.
Because student loan debts are cancelled after 30 years, the amount that graduates end up repaying can change depending on their level of income.
Based on this type of scenario, women with any debt over £45 998 would repay no more than £75 786, while men would repay a maximum £110 644 on any debt over £65 145. The research found that medical graduates of either sex on an average salary who have taken out a maximum loan are unlikely to repay their student loan debt in full within the 30 year repayment period.
Ercolani and Vohra say their research “confirms that medical graduate salaries are correlated with gender. This gender difference has an impact on the repayment of potential graduate debt. For those graduates who are able to repay the debt in the 30 year period, a higher yearly salary is advantageous as early repayment means fewer interest charges are accrued.”
Paying back the loan
Paying back a student loan is not like a bank loan or mortgage, because you start paying back only when you have an annual salary of £21 000 or more. Repayments are linked to the amount you earn. Each month 9% of your earnings go to the Student Loans Company. From the start of the loan, an interest rate of 3% is charged annually on your existing debt plus the cost of inflation.
All debts to the Student Loan Company are automatically cleared for everyone 30 years after graduation, regardless of the outstanding balance. This means some people will never pay back their student debt, while those with a higher annual salary will have a larger monthly repayment.
What these differences highlight is how sex differences in salaries influence how much debt is repaid over time. It is a complex system. On the one hand research shows that if you are a female doctor with an average type of debt, you may end up paying more than a male colleague. However, if you have the maximum debt—say in the region of £80 000—you might pay off less than a male colleague in the same position.
But does the cancellation of student debt make up for the difference in earnings? Charlie Bell, co-chair of the BMA’s medical student committee, said: “The striking thing from this research is the difference in pay for men and women. A resolution to this injustice really needs to become a priority for the next government—this is an embarrassment for 21st century Britain.”
Alice Ashworth, a second year student at King’s College London, said: “With over half of medical students now being female, there shouldn’t be any difference in salary or debt repayment between the genders.”
Deniz Üstüner, intercalating student at King’s College London, said: “To become a doctor, regardless of gender or any background, every individual has to go through the same rigorous academic tests and pass the same exams to graduate successfully. There is no excuse for salaries to be different.”
The data from the Labour Force Survey show how the discrepancies in salaries begin at age 30, when salaries for men start to increase rapidly compared with those of women. The paper does not discuss the reasons, but other research has suggested they include direct discrimination, career choices, career breaks, part time work, and motherhood.
Üstüner added: “Women may feel the pressure to choose between their career and having children. Proper measures should be implemented in the workplace to ensure that women who wish to further their career and have a family are able to do so without jeopardising their salary.”
Ercolani and Vohra conclude that “female medical graduates tend to repay less of their student debt because repayments are closely linked to earnings, but this may provide little consolation.”
Are early repayments an option?
Early repayments can reduce the effect of interest, which could lead to a lower total repayment in the long run. The Student Loans Company allows one-off additional repayments as well as standing orders.
For those with large initial debts it does not make financial sense to make extra payments, given that the debts will be cleared after 30 years. If the initial debt is smaller, however, earlier repayments would mean you could pay off your debt faster and avoid paying interest charges over a longer period.
In the final year of medical school, the total amount of maintenance loan given by the Student Loans Company is reduced, which may cause some students to take out additional professional loans with a bank. These loans should have priority when it comes to repayment as they will not get written off after a prolonged period and they have far greater interest rates than student loans. Additionally, many student bank accounts have overdrafts that are set at 0% interest during the period of study but after graduation these accounts convert into standard ones, with interest rates on the overdraft. These loans should also be repaid sooner rather than later.
Early repayments can seem attractive if you have the funds available, but bear in mind that you may need to either save or borrow money a few years down the line for a car or a mortgage.
Choosing to do a degree in medicine is a huge investment of your time and money. For poorer students, extra provisions and bursaries are available, but the levels of debt may act as a deterrent for some prospective students.
“The deterrence effect of the new system will be largely down to prospective students’ feelings about debt and to their alternative career prospects,” say Ercolani and Vohra.
Bell worries that the “terrifying” scale of the debt might deter students from more diverse backgrounds. “It seems deeply unfair, and can only be detrimental to the work programme initiatives that government seeks to implement, like those in the [Medical School Council’s] Selecting for Excellence report,” he said. The role of such widening participation initiatives is to ensure that candidates who meet the entry criteria for medicine should not be penalised because of their socioeconomic circumstances.
We don’t yet know if levels of debt will put off prospective medical students from studying in the United Kingdom or deciding to study medicine altogether. The impact of student loans has extensive and lasting implications. The high debts incurred by students on extended courses such as medicine, and the effect of wage discrepancies on repayments, highlight the complexity and inequality in the student loan system.Brendan Westhoff, final year medical student
1University of Southampton, intercalating in medical journalism at the University of Westminster
Correspondence to: email@example.com
Competing interests: None declared.
Provenance and peer review: Commissioned; not externally peer reviewed.
- Ercolani MG, Vohra RS, Carmichael F, et al. The lifetime cost to English students of borrowing to invest in a medical degree: a gender comparison using data from the Office for National Statistics. BMJ Open 2015;5:e007335.
- Student Finance England. Student Loans—A guide to terms and conditions 2015/16. www.studentloanrepayment.co.uk/pls/portal/docs/PAGE/RPIPG001/RPIPS001/RPIPS006/SFE_TERMS_AND_CONDITIONS_1516_D.PDF.
- Hardill I, Watson R. Career priorities within dual career households: an analysis of the impact of child rearing upon gender participation rates and earnings. Ind Relat J 2004;35:19-37.
- Moneysavingexpert.com. Should I pay off my student loan? Updated April 2015. www.moneysavingexpert.com/students/student-loans-repay.
Cite this as: Student BMJ 2015;23:h2643