Student debt jumped by about 32 per cent last year to £3.2 billion as inflation reflected its impact on graduates amidst growing cost of living, the Student Loan Company has revealed.

Britain’s official inflation rate rose to a record 16-year high in May and those paying off student loans were hit further with increase in rate due to what opposition MP described as the “ultimate stealth tax”.

Reports said the government had switched its official inflation measure to the consumer prices index (CPI) five years ago. But it still added to students loans at the Retail Price Index (RPI) rate, which has increased at a much higher rate.

The figures, opposition MPs said, could now be suffering disproportionate financial pressure, especially in the public jobs like teaching.

The old RPI measure used in student loans has risen to 4.3 per cent, which is a full one per cent higher than the official rate which is used as an index for public sector pay.

Student Loans Company, however, adjusts the figure it uses only once in a year, and this makes the amount graduates owe continue to grow at a higher rate still.

Against the backdrop that students are amassing heavy debts, the Conservatives said a review of university funding was urgent.

The Liberal Democrats reminded that in addition to the loan, students were also pilling up other debts on credit cards and overdrafts, and urged the government to reconsider the issue of student finance.

But higher education minister, Bill Rammell explained that up to two-thirds of new students entering university this year would be eligible for at least a partial maintenance grant of up to £2,835 a year.