Graduates who have recently completed their education with the help of student finance are just as likely to be under ‘heavy financial pressure’ as anyone else.

Many graduates would expect a degree to fast track their way into finding a job, yet this is not the case.

The current economic crisis is weighing down graduates who are struggling to find jobs as additional interest on their student loan boosts the amount they will have to pay back.

Recent graduates who had previously taken out a student loan to finance their university fees and living expenses may find it almost impossible to start repaying their loans as the complications of finding a job worsens due to the downturn of the UK economy.

Graduates turning to credit cards

Recent figures by the Student Loans Company (SLC) have revealed that the amount borrowed in England has risen by 32 per cent to £3.9 billion in the space of a year.

At a time where living expenses increase and job vacancies decrease, graduates are left moving in a downward motion as the worsening of the economy continues to deepen.

Earlier this year, shadow Secretary Rob Wilson of higher education said: “The significant rise in the amount lent to students coupled with the big rise in inflation figures suggests that students are, like many others in the UK economy, under heavy financial pressure."

As more people in the UK are made redundant and businesses begin to fall, graduates are left with nothing but an empty pocket and big debt with no income.

According to Stephen Williams, Liberal Democrat counterpart more students are turning to credit cards and overdrafts to pay their way.

He said: "In addition to their loans, students are also racking up thousands of pounds of commercial debt through credit cards and bank overdrafts. Ministers need to look again at the whole issue of student finance."

High interest on student loans

Currently, whilst the base rate lies at two per cent, graduates may be unfortunate to know that the interest on student loans is currently higher at 3.8 per cent.

Graduates may therefore find that the interest alone could add up to thousands of pounds by a few years time regardless of the decline in base rates.

Last week, the Bank of England’s Monetary Policy Committee (MPC) had cut the base rate further to two per cent.

The National Union of Students (NUS) is expected to reduce the interest rates on student loans enabling students to pay a smaller amount back than what could have been of a great deal.

According to Hobsons, the NUS will be likely to reduce interest providing other banks pass on the Bank of England’s base rate cut.

Yet graduates may be sad to know that the talks of reducing the interest on student loans will remain just that until September 2009 as the SLC regulate its rate just once a year…and that’s only if it does reduce its rate.