New research suggests that taking out a student loan can shape attitudes towards debt long after university, with 39% of students and graduates saying the experience made borrowing feel more normal.
Taking out a student loan may make young people more comfortable with borrowing, according to research examining the long-term financial impact of university life.
The survey, conducted by debt management firm Lowell, questioned 1,002 university students and graduates about student loans, borrowing and their attitudes towards debt.
It found that 39% said taking out a student loan had made debt feel more normal or made them more comfortable with borrowing. Among women surveyed, the proportion rose to 43%.
By comparison, only 18% said having a student loan had made them more cautious about taking on other forms of debt.
The findings come as student finance faces renewed scrutiny, with some graduates saying they did not fully understand the long-term implications when they applied. Concerns have also been raised about changes to repayment terms and young people taking on a substantial financial commitment before they have experience of managing credit.
Credit cards are a common first step into debt
Although student loans are often the largest financial commitment students make, credit cards were the most common first experience of other borrowing among those surveyed.
Almost half, 46%, said a credit card was the first form of debt they took on. A further 23% first fell into debt through an overdraft, while 17% borrowed money from family or friends.
The results suggest that university can be an important period in the development of financial habits, particularly when students are balancing accommodation, food, travel and other living costs alongside their studies.
The research does not establish that student loans directly cause people to use credit cards or personal loans later. However, it suggests that becoming accustomed to owing a substantial amount at a young age may influence how some people view borrowing.
University debt can continue into later life
Nearly one in five respondents, 17%, said they were still carrying debt taken on during their university years.
The figure was higher among graduates aged 25 to 44, with almost a quarter, 24%, saying they were still repaying debt that originated while they were studying.
John Pears, UK CEO at Lowell, said many people first encounter overdrafts and credit cards while at university, often without having received enough practical financial education.
“The challenge isn’t borrowing itself,” he said. “It’s that many young people, some still teenagers, are making some of the biggest financial decisions of their lives before they’ve been given the knowledge or confidence to fully understand how credit works.”
He added that student loans are presented as a routine part of higher education, which can change perceptions of what constitutes normal debt.
“That mindset doesn’t disappear after graduation,” he said. “It can carry into people’s twenties and thirties, influencing how readily they turn to credit cards or personal loans when money is tight.”
The findings highlight the importance of giving students clear information about different forms of borrowing, repayment obligations, interest and budgeting before they take on credit.
Students or graduates experiencing financial difficulties should seek free, independent debt advice as early as possible.