Debt Management Among Higher Education Students: Strategies For Averting


Debt management among higher education students: Strategies for averting anxiety

Andrew Holden and Cheryl McElroy

University Centre at Blackburn College


This paper is the product of a two year investigation into the impact of tuition fees on higher education students in the North West of England. It explores the attitudes, perceptions and beliefs of current and prospective students with regard to tuition fee policy and debt anxiety.  The study was carried out in Blackburn - a deprived area with the largest further and higher education institution in East Lancashire - between 2012 and 2014. The research was both quantitative - a questionnaire survey of 447 students already enrolled on a higher education programme or in the process of making an application - and qualitative - 8 in-depth, audio-taped focus group interviews with students from a range of academic and vocational backgrounds. The investigation yielded mixed attitudes towards debt and variations in the extent to which students were anxious about borrowing money and repaying loans. Analysis of the data revealed two broad debt management strategies adopted by students. These strategies can be summarized as: (i) psychological/emotional and (ii) practical/pragmatic. These approaches have implications for the continued recruitment of higher education students and their career trajectories.        


Keywords: debt anxiety; debt management; debt repayment; tuition fee policy; triangulation; grounded theory  

Introduction and context

Higher education in the UK has undergone considerable transformation in recent years due to global economic uncertainty and policy reform. In 2010, the British coalition government introduced a new funding regime that would bring unprecedented changes to university education. The aim of the policy was to offer a responsive, high quality, needs-based environment for students and to allow higher education institutions to set their own fees. The policy emphasised widening participation and the importance of educational provision for previously excluded social groups (Browne, 2010; Adams, 2013; Paton, 2013; Bolton, 2014).


At present, there are four sources of funding for higher education students in the UK. These include: tuition fee loans, maintenance loans for living costs, maintenance grants for living costs and special support grants (Student Finance England, 2012; Tobin, 2012; Tickle, 2013). Of these four, tuition fee loans and maintenance loans are repayable. Maintenance grants for living costs, on the other hand, are means tested, and while successful applicants are not expected to repay these grants, they may be limited to the amount of money that they can borrow from a maintenance loan. Special support grants are issued to students in specific circumstances; most notably, to students in receipt of state benefits. These are also non-repayable and are an alternative source of funding to maintenance grants for living costs. Unlike students in receipt of maintenance grants, however, students who are awarded special support grants are not limited to the amount of money that they can borrow from maintenance loans. All these grants and loans can be allocated in varying permutations and/or amounts, and students who qualify for a tuition fee loan may not necessarily apply for a maintenance loan. 


Whatever loans or grants students receive, the increase in tuition fees in England[1] from 3,400 in 2011-12, to between £6000 and £9000 in 2012-13, means that graduates can expect to incur substantial debts at the end of their period of study (Yew, 2010; Davis, 2011; Shepherd, 2011; Chowdry et al, 2012; Marszal, 2012a; Bachan, 2013; Moore, 2013). Indeed, it is anticipated that most of the 2012 higher education intake will leave university with debts in excess of £40,000 (Loveys, 2011; Shepherd op cit 2011; Jones, 2013). Under current regulations, repayments come into effect when the graduate is earning a minimum of £21,000, with the entire debt written off at pensionable age (Student Finance England, op cit, 2012).[2] According to the Universities UK report of 2013, the recruitment of full time undergraduates over the age of 21 years fell by 4 per cent in England in 2012, despite an anticipated drop of 9 per cent (Bingham, 2012; Universities UK, 2013 p5). In the institution in which the research was carried out, however, recruitment increased in the same year by 17.9 per cent.[3]


Not surprisingly, the increase in tuition fees since 2012 is causing prospective students to question the feasibility of higher education (Berzins, 2009; Callender and Jackson, 2010; Tickle op cit 2013). Two hundred and thirty young people from the Barking and Dagenham area of East London were surveyed either at their school, college or youth club. The survey revealed that almost half of those who had intended to progress to university felt that it was becoming unaffordable, and around 38 per cent stated that they were unlikely to make an application because of the fee increases (Berzins op cit p9). Current indications show that while students of secondary school age recognise the need to start saving for their university education, there is little evidence that this is happening in practice (Benton, 2012).

The prospect of debt accumulation prior to permanent employment has serious implications for graduates, many of whom are already experiencing difficulty in obtaining mortgages, securing salaries commensurate with a graduate level study and balancing repayments with rising costs of living (Loveys op cit 2011; Hutton, 2012; Murray-West, 2012). Family pressures, marriage and prospective child bearing add to the burden. It is not inconceivable that debt accumulation will result in large numbers of prospective students abandoning higher education in favour of more affordable options - a scenario that will impact negatively on higher education providers. Needless to say, the viability of undersubscribed programmes and the resultant academic and employability characteristics of the future workforce are a cause for concern.    

The intricate and disparate nature of student finance is placing increasing pressure on higher education institutions in the UK to ensure that the quality of their programmes remains high. Students are now, in a very real sense, consumers in a marketplace, where value for money is the key driver (Hagel and Shaw, 2010; Moore, McNeill and Halliday, 2011; Garner, 2012; Matthews, 2012). Higher education marketing teams are making renewed efforts to create bespoke programmes and to extend their provision to under-represented and/or marginalized groups (Kurz and Scannell, 2003; Equality Challenge Unit, 2012, 2013; Ratcliffe, 2012). Concerns about student finance have placed additional pressures on internal advisory services and on tutors themselves who are anxious about the (negative) effect of student debt on attendance, retention and achievement.   

The on-going overhaul of loans and fees accounts, to a large extent, for the paucity of academic research on the impact of debt on undergraduates. Ours is, we believe, one of the first investigations to examine this issue from an experiential perspective, providing a platform for further research on how students are affected by the new policy and the strategies that they adopt, psychological or otherwise, for managing debt anxiety. As the current literature is only able to offer an insight into the perceptions and experiences of students in the period prior to the reforms, it is important to acquire an understanding of the experiences of those students who have now entered, or are about to enter, the fee paying process. Our investigation has unearthed two broad strategies that students adopt for managing debt and the anxiety that it creates. These can be summarized as: (i) psychological and/or emotional strategies and (ii) practical contingencies or ‘solutions’. These managerial strategies have important implications for the future of higher education.           

Location and venue

Blackburn is a traditional cotton mill town in East Lancashire in the North West of England. The borough itself (Blackburn with Darwen) is among the 10 per cent most deprived in the country, with almost 50 per cent of children and young people living in the poorest wards (Office for National Statistics, 2011). More disturbing, at least from an educational perspective, is the fact that almost 40 per cent of the borough’s residents have no formal qualifications (ibid).

The primary data contained in this paper were collected at Blackburn College - a large post-16 institution in the centre of the town that offered a wide range of further and higher education programmes. At the time of the investigation, the sixth form centre of the college offered academic and vocational education to over six hundred students. Around two thirds of these students were enrolled on an AS/A Level programme (the traditional higher education access course in the UK for students aged between 16 and 19 years), while the remainder were working towards a national vocational qualification. The college’s higher education centre (officially known as The University Centre at Blackburn College) had over two thousand students on its roll, and was one of the biggest providers of higher education for a further education college in the country. In 2012-13, approximately 40 per cent of the college’s student population was of Asian heritage – a disproportionate representation of the ethnic composition of the borough where Indian and Pakistani residents made up 25.5 per cent (13.4 and 12.1 per cent respectively) of the local population (ibid). The college provided an appropriate setting for the investigation, not only because of its wide-ranging educational provision, but because of its success in widening participation in a deprived area.

Methods of data collection and research paradigm

The methods used throughout the investigation were of three principal kinds: (i) a review of the secondary literature – that is, Government and educational publications on demographic trends, tuition fee policy and student loans, (ii) a self-completion questionnaire to 447 students in the sixth form and University Centre and (iii) eight in-depth, audio recorded focus group interviews with randomly selected further and higher education students. This triangulated approach enabled us to check the consistency of the data and strengthened the evidence base for the analysis. The findings provided an illuminating insight into student attitudes towards debt anxiety and debt management.    A grounded theoretical approach was used in the ‘discovery’ and analysis of the data. Grounded theory is interpretivist in nature and was originally developed by sociologists Barney Glaser and Anselm Strauss in the 1960s (Glaser and Strauss, 1967).  Its principal purpose is to offer an explanation of social phenomena by allowing participants to speak to an inquiry through exploratory questions. The participants’ accounts are then categorised in accordance with iterative themes and concepts (Hayes, 1997; Glaser, 1992; Strauss and Corbin, 1998; Charmaz, 2006; Cousins, 2009; Birks and Mills, 2011; Thornberg, 2012; Urquhart, 2013). Although grounded theory is an essentially qualitative approach, we have incorporated the questionnaire data into our discussion and analysis. In short, the epistemological claims advanced below are the product of participant-researcher engagement in the focus group interviews and the quantitative (more generalizable) data from the student survey.   

Secondary research

During the first few months of the investigation, a large amount of information was gleaned from the Census and from consultation papers published by Government Ministries, non-governmental organizations, local authorities and higher education funding bodies. This was followed by a review of the literature on student debt – an issue that has grown in prominence since the introduction of the new fees policy. 

 To date, the literature on higher education student finance has focused on the issues of student employment (Curtis and Williams, 2002; Hunt, Lincoln and Walker, 2002; Callender, 2008; Chevalier, 2011; Neill, 2013), student expenditure (Callender and Wilkinson, 2003; Department for Business, Innovation and Skills, 2013; Doughty, 2013) and student budgeting (Christie, Munro and Rettig, 2001; Marszel, 2012b). The last two decades have also seen a shift towards policy based literature that documents the change from grants-based (non-repayable) support to partial or complete self-funding from the Student Loan Company (Scott et al, 2001; Dyhouse, 2007; Blake, 2010; Dearden et al, 2010; Thompson and Bekhradnia, 2010; Bolton, 2012; Hillman, 2012). Though some studies have examined the effects of debt on the attitudes and life plans of students (Davies and Lea, 1995; Harrison et al, 2013; Wilkins et al, 2013), there is very little analysis of the psychological and emotional impact of debt on the higher education experience or on how students deal with debt anxiety after they have enrolled.  
Student survey

In the initial stages of the research, a draft questionnaire was piloted on 30 student volunteers. The pilot survey enabled us to formulate some trial questions around debt and to make an initial assessment of how (or even whether) the new policy was affecting student aspirations. At the end of the pilot survey, a final version of the questionnaire was designed and distributed to over 600 further and higher education students.   

The main survey (conducted in the autumn term of 2012) enabled us to examine the extent to which debt was causing anxiety among students and whether this anxiety was affecting their higher education experience. The survey unearthed different attitudes towards borrowing money and differences in the way in which students thought about debt before and during their period of study. Attitudes were operationalized through a series of closed-ended questions about whether the new reforms were causing students to postpone or abandon higher education and the effects of the new policy on life and career plans.   

Throughout the survey, care was taken to avoid asking students about their income and/or whether they were in receipt of financial support from friends and relatives. The questions concerned the extent to which students felt anxious about taking out loans for educational purposes and whether these anxieties were affecting their choice of programme. The main foci were on: (i) factors influencing students’ decisions about whether to apply for financial support, (ii) the nature and permutations of the loans and/or grants for which students had applied, (iii) concern about debt and its impact on students’ higher education experiences, (iv) strategies, practical and emotional, for coping with mounting debts and impending repayments and (iv) the degree of student confidence in finding satisfactory employment after graduation.      

Of the 600 questionnaires distributed, 447 were returned. Of these, 391 (just over 87 per cent) were completed by students already enrolled on a higher education programme and the remaining 56 (13 per cent) were completed by sixth form students who were about to make an application. The sample comprised 162 males and 285 females (36 per cent and 64 per cent respectively) from the ethnic groups that were broadly representative of the composition of the college (249 questionnaires were completed by white students, 173 by students of Asian heritage and 25 by students in other BME categories - 56 per cent, 39 per cent and 5 per cent respectively). There was significant age variation within the sample, with 105 students (23 per cent) aged between 16 and 19 years, 209 students (47 per cent) aged between 20 and 25 years, 37 students (8 per cent) aged between 26 and 30 years and the remaining 96 students (22 per cent) over the age of 30 years. At the end of the survey, the results were entered onto a statistical database (Statistical Package for Social Scientists, version 20) and analysed in respect of: (i) the nature and extent of student borrowing and (ii) the interplay between debt accumulation and student anxiety. 

Focus group interviews

In the spring of 2013, eight audio-recorded focus group interviews, each lasting between one and two hours, were carried out with randomly selected cohorts of further and higher education students. The purpose of the interviews was to establish the impact of the new fees policy on: (i) sixth form students who had expressed initial interest in higher education progression but who were anxious about prospective debts and (ii) students already studying for a foundation or an honours degree at the University Centre. The interviews enabled us to explore some of the issues that were emerging from the survey.   

The number of students in each focus group ranged from seven to twelve, with 66 interviewees (43 females and 23 males) in total. Twenty three students (35%) were members of BME (mainly south Asian) communities. Two aide memoires were used to direct all the interviews. The aide memoires comprised open-ended questions and generic prompts that were used to generate discussion. Unlike a standardised research instrument, this (qualitative) interview was a dialogical tool designed to capture the participants’ perceptions and experiences of the new reforms in an exploratory and unobtrusive manner. The themes emerging from the first interview were used to steer the subsequent interviews and provided a framework for the analysis. On completion of the interviews, the data were transcribed and analysed in respect of the themes of debt perception, educational motivation, industrial values, financial philosophy, anxiety management, support systems and aspirations. These themes were later sub-divided and triangulated with the other primary and secondary data.   

Results and discussion

The data contained in this section have been culled from the questionnaire survey and the focus group interviews. Both sets of data revealed different student attitudes towards debt and different degrees of concern about future repayment. Debt anxiety was operationalized through a series of indicators including postponement or abandonment of university progression, attitudes towards borrowing, adjustments to career plans, dependence on loved ones and handling the psychological and emotional pressures that debts present.    

It is not surprising, given the abolition of free funded higher education, that the overwhelming majority of students in Blackburn (332 respondents in total, or 74 per cent of the sample) were in receipt of student loans. There were, however, variations in the amount of money that students borrowed and the purposes for which this money was used. Of the two repayable loans available (that is, maintenance loans for living costs and loans for the payment of tuition fees), 204 students (45.5 per cent of the sample) took out both loans, while the remaining students took out one loan or the other. In most cases (more than 99 per cent of the sample), students borrowed the maximum amount of money available regardless of the loan/s for which they had applied.         

One of the initial aims of the survey was to examine whether students had applied to the University Centre because it was close to home and the degree to which this was financially motivated. Our provisional (tenuous) hypothesis was that the lower tuition fees at Blackburn, combined with practical and financial support from relatives, were significant drivers in the reduction of debt anxiety.[4] Almost 89 per cent of the students (395 in total) stated that the location of the Centre was instrumental in their decision to progress to higher education, while 58 per cent (256 students) stated that they wanted to study near to where they worked. Around 71 per cent of the sample (319 students) wanted to remain near to friends and relatives, while 60 per cent (265 students) had applied to the Centre because they believed that Blackburn was a relatively cheap place to live. Interestingly, only one third of the students (148 in total) had applied for a higher education programme elsewhere, and of those who had not, only around one quarter (107 students) had applied to Blackburn because of the lower tuition fees. Unless Blackburn is atypical of other university towns and cities, these findings confirm that higher education institutions can be successful in attracting people with strong local ties, regardless of the costs of tuition.  

The question of whether the new fees policy was causing students to choose a different higher education programme (either at Blackburn or elsewhere) than the one they had originally intended was also tested. For the overwhelming majority of the students (418 in total, or 94 per cent), this was not the case. Of the very small number of students to whom this did apply, the changes were minor in the sense that there was little deviation from the original choice of programme. These changes included the switch from pharmacy to a general science or IT degree, sports psychology to sports management, nursing to child development and, most radical of all, fine art to youth and community studies.[5] This reluctance of students to change academic direction in order to study at a local institution and/or to be enticed by lower tuition fees was echoed in the comments of a student in the sixth form centre who was in the process of applying to study veterinary science at another institution:

“…veterinary is like 5 years and everyone will be in around a hundred thousand pounds worth of debt that for what we are going to earn we aren’t ever going to be able to pay it back. There will never be an amount of money that you can earn in veterinary that will let you pay it all back” (101/43)

This young woman’s awareness of the magnitude of her future debt supports the contention that while lower tuition fees are not insignificant, they are by no means the decisive factor in a student’s choice of where or what to study. This was supported in the survey in which 372 students (83 per cent) identified the quality of the programme itself as either very important or fairly important in their decision to apply to Blackburn, compared with only 67 students (15 per cent) who stated that it was not important at all.[6]

The impact of fees and loans was examined in a subsequent question about whether the prospect of debt had caused (or was causing) some students to eschew higher education completely. Almost 29 per cent of the students surveyed (128 in total) stated that the new fees policy had made them think twice about applying for university, while 43 per cent (192 students) were mildly cautious and 28 per cent (122 students) were unaffected. As most of the students were already enrolled on a degree programme, these findings raise important questions about whether debt is causing the kind of anxiety that one might expect. When asked how worried they were about having to get into debt in order to pay for their education, 106 respondents (24 per cent) stated that they were very worried, while 200 respondents (45 per cent) stated that they were a little worried and 135 respondents (30 per cent) stated that they were not very worried at all. These wide ranging responses can be seen in the following students’ comments:    

“It’s that constant back of your head type thing when you’re older and married.  It’s just that thing at the back of your mind really that you’re having to pay it off. Thirty years is a long time.” (106/21)

“It’s scary isn’t it, because you get a statement every year of what you owe, and like thirty thousand…like if you were to go to the bank and say: “Can I have that in a loan?”…it’s like you’ve got that hanging over you.” (107/37)

“I can’t explain it, but it is just at the back of your mind that you’ve got something to cover up and worry about.” (101/21)

“There is no other way of going to university here without paying that money so it is just something that needs to happen.” (101/50)

“You get used to paying that amount out…you don’t think about it as debt.” (107/54)

Despite these varying degrees of debt anxiety, the fact that these students had already borrowed substantial amounts of money to pay for their education suggests that they were inclined to regard their debt as an investment rather than the financial millstone attributed to conventional loans such as mortgages and higher purchase agreements. One student found solace in the fact that any outstanding debt would eventually be written off:

“What you’re paying off each year will never add up to what you have totally borrowed, so when it gets wiped, there’ll still be some money left that you’ll never pay back.” (101/46)

Other students found practical solutions that helped them to manage their debt as it was growing:    

“I’m not worried because I’m a saver, so I’ve always been a saver, so when it comes to that, then I’ve got my money there…my mum’s a single parent, so she had to save, not with much, but she had to, so I’ve kind of adopted that.” (106/27)

“I couldn’t go if my family couldn’t afford to give me money; I couldn’t afford it. There isn’t enough financial support from the universities for me if my family hadn’t saved money up; so if my mum hadn’t been preparing for it, I wouldn’t be able to go.” (101/30)

“I’ve paid my first year through my maintenance loan and then I’ll have to borrow two thousand three hundred pound off my dad.” (106/47)

“I’m going to Brighton and I’ll be living with a friend, so my accommodation’s sorted…I don’t have to pay for accommodation.” (105/41)

“I was planning on like, if I had a part time job of two nights a week or like a weekend job, I could probably survive on that…just take money out that I need for big things from the money I’m borrowing and like keep as much of that as possible.” (102/43)

“You can open a savings account can’t you? So you could…maybe I’d think about putting some of my wage into that every week or something probably…the thought of it dawning on you, like that much money, you need to really think about saving some money just like for getting a house and stuff…if they know you’ve got a savings account where you’re saving this money, they might be more willing to help you out.” (104/122)

While university students have always found ways of making ends meet – saving and investing money prior to enrolment, remaining in the family home while studying, borrowing loans from benevolent friends and relatives, applying for part time work, seeking free accommodation and so forth – these comments convey a heightened awareness of growing debt among students and of the fact that educational debt on this scale is unprecedented. 

Student anxiety about debt management is, ipso facto, anxiety about repayment. The survey revealed that just over one quarter of the students (115 in total) allowed the issue of repayment to occupy their thoughts on a regular basis, while 34 per cent (153 students) thought about it sometimes, 16 per cent (71 students) hardly ever thought about it and 9 per cent (40 students) never thought about it at all. Of the remaining 68 students (15 per cent), 52 had not taken out a loan and 16 students (around 3.5 per cent) failed to answer the question. The reasons for these variations in student anxiety about loan repayments represent some of the most significant findings of the investigation. The most common responses among the less anxious students were: (i) that the repayments would not, under the current rules, commence until graduates were earning a minimum of £21,000, (ii) that debt was a necessary evil for all higher education students in the UK; hence, it was a shared problem, (iii) that the loans would be repaid over a long period of time, (iv) that the repayments would be calculated on income and only, therefore, on the student’s ability to pay the money back and (iv) that the interest rates on student loans were low.

While some students were anxious about their debts, others managed to suspend their anxieties until the repayments were due:

“At the moment, I’m not worrying about it because I want to enjoy it, so I’m not going to worry about it till I’m like twenty-five cos that’s the age that I’m going to be pretty much going to be starting a job…so I’m not going to be worried about a mortgage or stuff like that…I won’t be worrying about it until I’m a lot older.” (103/50)

“…emotionally and mentally, when we’re studying, we won’t really think about it, but when we’re looking for jobs, then we’ll think about it.” (105/56) 

Unlike conventional debts, student loans have come to be seen as a ‘graduate tax’ – a concept that enables some students to postpone their anxieties until they are in salaried employment and/or in receipt of other disposable income. There were, however, some age and gender variations in anxiety that are worthy of commentary. Younger students - that is, students between the ages of 16 to 19 and 20 to 25 years - were generally less anxious about taking out loans for educational purposes than students in the 26 to 30 and over 30 age groups. These younger students were also less likely to allow their debts to prevent them from entering higher education and more likely to believe that they had little choice other than to get into debt if they wanted to improve their life chances. Around 70 per cent of students in the two youngest groups regarded the avoidance of debt as a luxury compared with only 57 per cent of students in the two older groups. Conversely, only 31 per cent of students over the age of 30 years were confident in finding well paid employment at the end of their studies compared with 41 per cent of students in the other three groups. The data also revealed that of those students who borrowed the maximum amount of money available, women were more likely to worry about future repayments than men. More than two thirds of the female respondents stated that they worried about repayments often or sometimes compared with just over half of their male counterparts. 

These findings confirm that debt from tuition fees and loans are producing mixed reactions among students and that responses to debt vary within and between student groups. Though the new reforms have not led to the decline in the number of higher education students that was initially feared (attributable, in part, to the continued recruitment of oversees students and to relaxed university admissions policies), there is no guarantee that they will not do so in the future. The data reveal that the revised fees policy is making students more circumspect about higher education progression than their predecessors. While most of the participants had made the decision to continue with their studies, there is no knowing the extent to which the policy is deterring other students, or whether financial pressures will cause those already on-programme to withdraw before completion. What is clear, however, is that there is significant variation in the way that debt is managed by students and the impact of this debt on their higher education journey.    


The data suggest that while most students are coming to terms with having to borrow large amounts of money to fund their university education, the psychological and emotional effects of this policy are nuanced. For some students, the new policy is a major source of anxiety; while for others, it is of relatively little concern. The signs at this early stage are that younger students, because they are less experienced in taking out loans and more hopeful of finding long term employment than older students, are less likely to worry about debt in the short term. Added to this is their ability to regard debt as a necessary evil and to take some consolation from the notion that time is on their side. While this study has shown little variation in debt anxiety by gender, future research would do well to re-examine this, along with the influence of other variables such as location, socio-economic group, family type, ethnic membership and employment status. Analysis of this kind has implications for tuition fee policy and for higher education recruitment in the years to come.

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