Student loans hamper deposit saving for 1.5 million young adults
Lifetime ISA (LISA) provider OneFamily said one-and-a-half million young adults saving for a home are unable to do so effectively due to student loan repayments.
OneFamily’s study of 2,000 adults aged 18-40 found that 70% of those with a student loan who are saving for a property believe their repayments make it more difficult to save for a home deposit. OneFamily said this equates to more than one-and-a-half million people.
The research suggested that housing costs, household bills and student loan repayments are affecting the ability of some prospective buyers to put money aside for a property purchase.
OneFamily also found that among those saving for a home, 99% said they would direct at least part of the money currently used for student loan repayments towards a property deposit if their debt was written off.
The findings come as average student loan debt among graduates in England has exceeded £53,000.
OneFamily noted that some borrowers, particularly those on Plan 2 loans, continue to see their balances increase despite making repayments.
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Gen Z more likely to report concerns
Younger borrowers were more likely to report concerns about student debt than older respondents.
Almost half (48%) of Gen Z respondents said their student loan limits their financial options, compared with 29% of millennials.
Meanwhile, 40% of Gen Z borrowers said they were worried about their student loan, versus 26% of millennials.
Beth Tait, personal finance champion at OneFamily, said: “There are already a huge number of barriers making it challenging for young people to buy their first home. It’s a big life goal and more needs to be done to help people achieve it. Right now, thousands are stuck in a ‘rent and repay’ trap – juggling high costs, as well as their student loans, making it difficult to put aside much at the end of the month.
“It’s worrying to see so many feeling stuck in a cycle that is difficult to break out of. There are solutions out there, like the Lifetime ISA, to help young people manage their money and reach their life goals. But there is still much more work to do in terms of financial education and resources to help this generation save and build financial resilience.”
