Student loans deepen the class divide they are meant to solve

As recently reported, many graduates now leave university owing more than £50,000, while a growing minority will carry balances that stretch well into six figures. This is no longer an abstract concern about future affordability. The scale of debt is already shaping how young people think about education, influencing their choices and whether they believe the rewards of higher education justify the risks involved.

At the Social Mobility Commission, we are increasingly concerned that a system designed to widen opportunity may, if left unreformed, begin to narrow it. Higher education was never a guarantee of wealth. But it was widely understood as a fair chance to progress - a way for talent and effort to count for more than the circumstances of birth. The expectation was not riches, but a realistic prospect of improving one’s position in life, and certainly that education itself would not become a long-term financial handicap. That expectation is now under strain.

Student debt does not sit passively in the background. Large, long-term liabilities influence decisions. For students from wealthier families, parental support can cushion the impact and reduce the psychological weight of borrowing. For others, debt is felt far more sharply - financially and emotionally -shaping not only what they study, but how they live while doing so.

One clear sign of pressure is the growing number of students working close to full-time while studying. This is no longer confined to those from the most disadvantaged backgrounds. Maintenance support has failed to keep pace with living costs, while parental support has become harder to rely on as families face sustained cost-of-living pressures of their own. For households with more than two children, these constraints are particularly acute - a reality that any serious student finance policy must acknowledge.

Debt also shapes decisions before and after university. Prospective students from lower-income households are more debt-averse than their better-off peers. For some, the sheer scale of headline figures deters them from applying at all. Others make defensive choices: opting for “safer” courses, shorter degrees or universities closer to home, regardless of aptitude or ambition. When that happens, talent is constrained before it has a chance to flourish.

For those who do go to university, the effects persist long after graduation. Graduates with substantial debt are more likely to delay buying a home, postpone starting a family and prioritise immediate income over long-term development. Risk-taking becomes harder to justify. Careers in teaching, social care, research or entrepreneurship, all vital to the country’s future, look far less viable when repayments stretch out across decades, often with little prospect of any meaningful debt reduction. For too many people, student debt has become a heavy and enduring financial burden.

This matters well beyond individual outcomes. Social mobility depends on people believing that effort is worth it. Reward remains the strongest driver of ambition. When the perceived returns to education weaken, fewer people will push themselves to get on and move up. Over time, that becomes a quiet but corrosive threat to Britain’s economic dynamism.

We must also be honest about who bears the burden. While student loans are formally universal, their impact is not. Graduates with family wealth can repay earlier or avoid borrowing altogether. Those without such support carry the debt longest. An education system that entrenches disadvantage, even inadvertently, is failing one of its core purposes.

The good news is that this problem is solvable. But it requires a full and serious review of the entire student finance system, not piecemeal fixes. That review should cover both tuition fees and maintenance support, and how they interact with the wider tax system. It should examine whether current maintenance arrangements are realistic in a high-cost economy; whether assumptions about parental support still hold; and whether students should be expected to work near full-time simply to afford to study.

Crucially, it must examine the impact of rising interest rates charged by the Student Loans Company. These have increased sharply in recent years, inflating balances even for those making regular repayments. For many graduates, the system now feels punitive rather than proportional.

Student debt is no longer just a graduate issue. It is a social mobility and economic growth issue that demands a serious, evidence-based response.

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Robert Wilson is Deputy Chairman of the Social Mobility Commission.

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