Nurses and midwives could end up paying back thousands more for their student loans than their high-earning peers in finance and law, new research claims.
According to a report by the University and College Union, a “regressive” student loan system means that many of these university leavers will struggle to save for a mortgage or a pension.
Researchers found that when a male nurse and a man working in finance leave university, they are both likely to have debts of £44,000.
However, while the finance worker will pay back £55,000, paying their debt off at the age of 38, the lower-paid nurse will fork out £4,000 more - despite never fully paying back their loan.
This is because, unable to pay off their loans quickly like their high-earning counterparts, lower paid workers continue to accrue interest that must then be paid off.
Interest rates on student loans rose by a third in April, with rates starting at 3.1% and reaching 6.1% for the highest-earning university leavers.
Dr Gavan Conlon, one of the authors of the report, said that the analysis debunks claims that the current student loan system is “progressive”.
“At a time when there is a crisis in teacher and nurse recruitment, these workers, upon whom almost everyone relies, should be offered incentives to enter these professions rather than the current approach that appears to penalise workers for the entire duration of their working lives.”
However, the same situation does not apply for female nurses and midwives, with these workers set to pay back £26,000, while female finance and law professionals are expected to pay between £61,000 and £62,000.
But the report states that graduates at the other end of the pay scale may also find a mortgage and a pension unachievable, with researchers predicting a “mid-life tax crisis” for high-earners.
The study claims that between tax, NI contributions and student loan repayments, many higher-earning graduates will end up paying marginal tax rates of 51% throughout their 30s and 40s.
For example, a male engineering graduate is expected pay 51% tax on his earnings over £45,000 between the ages of 33 and 47, while male doctors and IT professionals will spend their entire thirties at this rate.
In comparison, graduates without a loan in the same profession can expect to pay 42% tax, while someone without a degree at all is expected to pay 32%.
But it is high-earning female graduates - who often earn less than their male counterparts and therefore pay off their student loans more slowly - that are hit particularly hard by this issue.
A female medical professional is predicted to spend five years longer than their male colleagues paying the 51% tax rate - 22 years in comparison to 17 years.
A woman working in finance will also spent three years longer than her male counterparts at this rate.
UCU general secretary Sally Hunt said that the report exposes how there are “no winners” in the current student loan system - “just different ways to lose”.
“That money should be going into saving for retirement, towards a mortgage or even starting a family. This generation of graduates sees debt wrack up from their first day of university and some will never pay it off,” she said.
“No wonder they are so angry with the politicians who created such a deeply unfair system at the same time as reducing corporation tax for the most profitable businesses - who themselves benefit most from the supply of graduates.”
Shadow universities minister Gordon Marsden said the report confirmed it is getting “harder and harder for ordinary young people to access higher education”.
“The Tories have tripled tuition fees, abolished maintenance grants for poorer students and frozen the repayment threshold, hitting graduates on the lowest incomes,” he said.
“It is professions such as nurses and midwives that are being hit the hardest, and if the NHS can’t recruit the staff it needs then we will all be worse off as a result.
“The government needs to decide if they think it is fair that the debt burden should fall so heavily on the very people our society relies so heavily on,” Marsden added.
Universities minister Jo Johnson said: “Our higher education system ensures that graduates only start paying back their loans when they are earning over £21,000. Unlike commercial alternatives, student loans are available to everyone, regardless of background or financial history.
“This approach ensures that costs are split fairly between graduates and the taxpayer, and does this while helping more young people from disadvantaged backgrounds go to university than ever before —up 43% since 2009.
“We should of course not be complacent. Students deserve value for money for the courses they are paying for. One of the central goals of our higher education reforms is to make universities accountable for students’ experience and the quality of education they receive through the Teaching Excellence Framework.”