Three-quarters of graduates will never clear their student loan debt, according to a report.
Most graduates will still be paying off their loans well into their 50s, with the Institute for Fiscal Studies (IFS) report blaming high fees and large maintenance loans.
English graduates have the “highest student debts in the developed world”, the IFS said.
Coalition government reforms in 2012 initially saw the lowest-earning third of graduates better off by about £1,500 but the replacement of maintenance grants with loans meant debt rates went up quickly.
£57,000 – the debt levels students from low-income families will graduate with
£5,800 – the amount the average student will pay in interest
£40,000 – the amount those on higher incomes could pay in interest
£1,500 – the amount lowest-earning graduates saved after 2012 government reforms
£28,000 – the amount universities get on average per student per degree
Interest rates on student debt are “very high”, reaching up to 3% above inflation, according to the report.
The study added: “There is a risk that better-off parents will pay fees up front, especially if they think their offspring will be high earners.
“This would increase the cost to the Government in the long run.”
Institutions now get 25% more funding per student than they did in 2011 and most of this is funded by richer graduates.
Jack Britton, one of the report’s authors, said: “Recent policy changes have increased university funding and reduced long-term government spending on higher education while substantially increasing payments by graduates, especially high-earning graduates.
“There is probably not much further to go down this route, but proposals for reducing student fees tend to hit the public finances while benefiting high earners the most.”
The report stated: “Reducing tuition fees or bringing back maintenance grants would have the advantage of allowing government to target specific students or courses that have wider benefits to society.
“This would, however, significantly increase deficit spending and lead to a smaller, but still considerable, increase in the long-run government contribution.”