Students' expectations of debt in UK higher education

The funding of students in UK Higher Education (HE) has undergone radical reform over the past two decades. Using a unique dataset, this paper investigates student expectations of debt. We find that a student’s gender, ethnicity, and year of study play an important role in determining their expected debt. Students in receipt of financial support from their parents and those with part-time jobs anticipate a lower level of debt. We also find that the higher a student discounts future income, the greater their expected debt, and the more risk-averse a student the lower the expected debt. Our findings also suggest that a student’s expected earnings post-graduation has a positive impact on current debt. If the level of student debt, which is expected to rise in the future, compromises access to HE, then the close targeting of student financial aid is warranted and an equitable repayment framework needs development.