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Olivia Adams owes £70,000 in debt from her university studies – and mentions that a significant portion of her income is used for repayments and taxes, making salary increases “less satisfying” than they could be.

Olivia, aged 24, enrolled at the University of Kent in 2019 to pursue an undergraduate law degree, later obtaining a master’s from the University of Law to become a solicitor.

She took out a total of £55,000 through her undergraduate and postgraduate loans — however, even though she has been making payments on both since beginning her career as a solicitor after finishing school, the accumulated interest has caused her debt to increase by nearly £15,000.

She mentions that she would have valued having more details about the loans and their financial consequences at the time she took them, stating that she made the choice “in the dark.”

“I would have valued more transparent details back then, along with a better understanding of the interest systems and the lasting financial harm they might bring, allowing me to make a much more knowledgeable choice,” she stated.

Even though she doesn’t feel sorry for attending university since her qualifications are necessary for a career in law, she wishes she had known everything before taking on loans.

She stated: “If I had been completely aware of the real chance of paying back much more than what I initially borrowed, I would have made a different choice.”

She stated: “I could have looked into different paths like apprenticeships, borrowed less money, or thought again about whether university was financially feasible for someone in my situation.”

Olivia, similar to other graduates who attended university in England between 2012 and 2022, is enrolled in a Plan 2 loan for her undergraduate degree, andrepay9 per cent of her total income above a £28,470 annual threshold.

She mentions paying 6 percent of her entire income that exceeds £21,000 on her postgraduate loan.

Although Olivia has paid back more than £1,000 since she began working two years ago, the total she still owes has increased by nearly £15,000 due to the high interest charges on both of her loans.

Interest is charged at the rate of the Retail Price Index (RPI) plus 3 percent while the student is enrolled, and afterward at a rate ranging from RPI to RPI plus 3 percent, based on the graduate’s earnings. For postgraduate loans, the interest rate is set at RPI plus 3 percent.

The loans will not be settled until 30 years from when she began repaying them.

The mix of loans, along with a 20% income tax and 8% national insurance (NI) on earnings ranging from £12,570 to £50,270 – results in numerous graduates who have both postgraduate and undergraduate loans paying an overall tax rate of 43%, even on a typical salary of £38,000.

This is a higher marginal tax rate compared to what someone earning £90,000 would pay if they didn’t have a student loan.

Olivia, hailing from the southeast of England, characterized the growing balance on her loans, even with regular and increasing payments, as “disheartening and financially limiting,” and refers to her payments as a “graduate tax.”

She said: “Rather than experiencing the full benefits of years of study, exams, and training, it often seems that significant financial advancement is hindered by the burden of these loans.”

The mental effect of being aware that the debt is increasing more quickly than I can genuinely manage introduces a continuous sense of stress and doubt regarding my future financial stability.

Olivia mentioned that her increasing debt has made advancing in her career more challenging.

She stated, “Salary increases and career advancements are beneficial and should be satisfying, yet their effect is naturally diminished since increased income results in significantly higher student loan repayments.”

A rise in pay—whether significant or minor—may be mostly offset by the higher graduate tax added to standard deductions, which can seem unjust and somewhat counterintuitive.

She expressed feeling frustrated and overwhelmed, noting that her payments will only slightly reduce her total debt.

Olivia stated, “The continuously increasing loans make financial advancement seem slower and less satisfying than it ought to be, and they introduce a sense of worry about whether I’ll ever fully enjoy the advantages of progressing in my job.”

So far, it appears that ministers are hesitant to modify student loans, even though there has been opposition to what many view as an inequity.

Chancellor Rachel Reeves stated earlier this month that she believes repayments are “fair” and has decided to keep the threshold for repaying Plan 2 student loans frozen between 2027 and 2030, even though graduates were previously told the threshold would increase each year according to average earnings.