Students 'clinically depressed' by worries over debt

Students are being driven to "pathological depression" by anxiety over debt, according to a book published today.

Undergraduates' academic results are also suffering as they go further into the red, the book, edited by academics from Bath and Exeter universities, found. Students who expect to run up large debts by the end of their course are four times as likely to suffer from depression as their colleagues who expect to owe less, the study by economic psychologists found.

Nearly a third (32 per cent) of undergraduates who anticipate owing substantial amounts are depressed, compared with just 8 per cent of other students. Meanwhile half of the students questioned believe their financial problems damaged their academic results.

Female students are more likely to stick to a budget, and less likely to get into debt than men. But paradoxically women tend to be more worried about their debts. "While women are likely to pay a bill with their last £10, men are more prone to spend it on alcohol and social activities," according to the book's editors, Adrian Scott, Professor Alan Lewis of Bath University and Professor Stephen Lea of Exeter University. "Men are more likely to take a devil-may-care attitude, spending irresponsibly on their social lives even as the amount they owe rises."

However students tend to be too optimistic about their future earning power and run up debts believing they will be able to pay them off quickly. About two-thirds of students over-estimated their likely salaries, the book, Student Debt: The Causes and Consequences of Undergraduate Borrowing in the UK, found.

The authors blame the replacement of grants with loans and call on the Government to overhaul the student funding system and to introduce money management lessons in schools. Professor Lea, deputy vice-chancellor of Exeter University, calls for the scrapping of up-front tuition fees. He advocates a switch to a system where fees are paid at the end of a degree, or to a graduate tax.

The National Union of Students estimates that students graduate owing up to £12,000.

* Graduates are being offered salaries of more than £68,000 to work in Europe as companies compete to attract the best workforce, according to a report published to day. On average, graduates starting work in the EU earns £28,000, it found.