Dior Girl

* Escalating student debt spells big trouble for credit files
in the future

* Graduates likely to be servicing £15,000 debts until their
mid-30s

Students face a potentially ‘calamitous’ problem with their
credit histories on graduation thanks to the now inevitable
prospect of leaving college or university with high debt levels.

Moneynet.co.uk, the online financial data comparison site, has
warned students to keep a close eye on their credit files and to
ensure that they keep up to date on all credit card repayments
and loan debt – otherwise they could be in for a nasty shock
when it comes to arranging mortgages and credit in the future.

“The major credit reference agencies such as Equifax and
Experian hold detailed files on our financial histories, which
start as soon as we open a bank or credit related account,” said
Moneynet chief executive Richard Brown.

“The majority of graduates are looking at servicing a minimum
debt of £15,000 (see note 1) until their mid-thirties, which is
clearly not the best way to start out when it comes to wanting
to arrange a mortgage or anything else requiring a sound credit
history.

“So we would advise students to keep an eye on their credit
files to make sure all the information held on them is accurate.
In addition, it is crucial that students understand the
importance of not over-committing themselves as missed payments
could mean they have accumulated an adverse credit history even
before they embark on a professional career. This could take
years to repair.” added Brown.

Brown also advised new – and existing – students to make sure
they are getting the best from their student bank accounts. And
to avoid being seduced by gimmicky special offers designed to
secure their lucrative business.

“Banks love students as they want to keep their business when
they graduate: but most young people can afford to be choosy
when it comes to picking a bank. We would always encourage new
account openers not to be blinded by the marketing razzamatazz,
and to focus on core banking services, free overdrafts and
decent rates of interest,” said Brown.

* * * * * * * * * * * * * *

Note (1)

Last month the Government confirmed that after the introduction
of top-up fees in 2006, while 400,000 students may be able to
claim non-repayable grants and bursaries, most will service a
minimum debt of £15,000 until at least their mid-thirties. High
street banks maintain that in reality the average graduate debt,
including fees, for those entering university next year is
likely to be nearer double that by 2009.

And a recent survey by NatWest Bank this month suggested that
freshers starting university in the autumn expect to spend
£28,600 over the three years of their degree courses and to
graduate owing nearly £14,000.

Moneynet has a free guide to Student Finance – Moneynet Student Finance Guide

Press enquiries

Moneynet: Richard Brown, Chief Executive, 020 8313 9030

David Andrews Media Ltd Cathy Tully, 01273 774109
cathy@davidandrewsmedia.co.uk

Consumer enquiries: online@moneynet.co.uk moneynet.co.uk

Editor’s notes

Moneynet.co.uk is the UK’s most established personal finance
research and data website. The company offers consumers a wide
range of low cost financial products: from mortgages and
personal loans; to car, home and medical insurance; credit
cards; savings accounts and best-buy fixed rate products.
Moneynet.co.uk is an ethical, impartial and comprehensive source
of consumer finance information, covering the whole of the
personal finance sector.

Tags: Credit, Face, graduates, History, Moneynet, Nightmare, warns

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