Lessons in the never-never

Student loans are encouraging a debt culture among young people, warn Alan Lewis and Adrian Scott

Parents are worried about the effect of debt on their children. A recent national survey that we co-authored found that while 47 per cent of respondents favoured the student-loan scheme and the need to borrow to finance higher education, 67 per cent of parents with children in higher education opposed it. Parents of students were also less likely to believe that borrowing money while at university helps young people understand "the realities of the market" and were more likely to argue that such borrowing leads students to become accustomed to debt.

This supports evidence from a number of studies on the impact of rising levels of debt on student wellbeing. The studies, collected in a forthcoming book on student debt, show that the majority of students - 85 per cent - are resigned to having to borrow while at university. As levels of debt increase over the three or four years of university, however, attitudes towards credit and debt become more tolerant. But those who anticipate excessive debts on graduation are more likely to suffer anxiety (74 per cent) and depression (32 per cent) compared with other students - 45 per cent and 8 per cent respectively.

The experiences of male and female students are by no means uniform either. Fewer women incur debt, those who do tend to have lower levels of debt and, paradoxically, they are often more worried about their debts than men. In addition, women are more likely to budget than men: while women are likely to pay a bill with their last £10, men are more prone to spend it on a social activity.

The need to borrow to finance higher education breeds a distrust of financial institutions. When asked their views of banks and other lenders, unfavourable comments outweighed favourable ones 6:1.

Finally, students are surprised by the amount of debt they have to repay when they graduate, suggesting that they do not really consider the long-term effects of their borrowing behaviour.

This suggests that prime minister Tony Blair is right to order a rethink on university tuition fees but, in light of chancellor Gordon Brown's estimation that the cost of scrapping the annual tuition fees and cost-of-living loans will be £600 million a year, this will be no easy task. Given that less than half of the general public supports the present system, the pressure for change is there and is likely to increase as more people come into contact with higher education. At the very least, the government should be aware that the student loan scheme is encouraging the development of a debt culture, accompanied by cynical attitudes towards financial institutions.

Alan Lewis is head and Adrian Scott is a PhD student in the department of psychology, University of Bath.

For further information see Student Debt: The Causes and Consequences of Undergraduate Borrowing in the UK, edited by Adrian J. Scott, Alan Lewis and Stephen E. G. Lea. Email: direct.orders@marston.co.uk . See also www.nestlefamilymonitor.co.uk (issue 12).