Students graduating in 2023 will owe £44,000, says study

Students will leave university with debts averaging more than £40,000 within the next 20 years, a study claims.

Children born in 2002 - who were the first to qualify for the Government's Child Trust Fund - will owe an average of £43,825 when they graduate in 2023. The average level this year is £9,210.

Research by the Liverpool Victoria friendly society, the UK's largest friendly society, says graduates' starting salaries will rise, with the average university leaver earning £52,910 in 2023. This is more than double the current average of £21,985.

However, the proportion of debt to salary is set to soar - from debts worth 42 per cent of a graduate's starting wages today to 83 per cent in 2023.

The society also predicts that by 2023, nearly all people then aged in their twenties will have a degree. It calculates that if 70 per cent of all 18- to 21-year-olds were in higher education by 2023, the overall debt of graduates would reach a total of nearly £90bn.

The study identified education as one of three major concerns for today's Child Trust Fund generation when they reach adulthood. The others will be health care and housing.

Spiralling costs will mean that the price of the average house in 2023 could be £600,000, with the average property for a first-time buyer costing £430,000. Meanwhile, annual private medical insurance will cost around £1,376.

Young people will leave home at a much later age than today's young adults, partly because of the very high cost of properties for first-time buyers. But the cost of everyday items will also increase, the study found. A pint of beer is expected to cost £7.56 in 2023 (it costs about £2.65 today), an adult cinema ticket will be £16.56 (£5.80 today), and a weekly travelcard for Zones 1 and 2 on the London Underground will cost£51.50 (currently £21.40).

The Child Trust Fund was launched this year as part of a government attempt to encourage families to save for the future. The scheme will operate from April onwards, when parents of all children born after 1 September 2002 will receive vouchers worth £250. An extra £250 will be given to low-income families.

Families will be encouraged to save by being permitted to invest up to £1,200 a year, tax free, in the fund account of their child, until the child reaches 18.

Nigel Snell, the head of external affairs at the Liverpool Victoria friendly society, said students and their families would have to save more in the future to fund children through university.

"Although everyone knows that life gets more expensive between birth and adulthood, the substantial increases in certain costs that we are predicting will have a dramatic effect on the future choices of today's babies," he said. "Making additional savings will be important to provide a meaningful nest egg when the child reaches adulthood, in order to finance these future essentials."