More than 1.5 million young people aged 18-40 say having a student loan is making it harder for them to save for a home, suggesting they are having to stay in rented accommodation for longer.
With both high rents and bills, as well as student loan repayments, many are stuck in the ‘rent and repay trap’, as high essential costs are making it more difficult to put aside enough money to get out of this cycle and buy a place of their own.
Research by Lifetime ISA provider, OneFamily, looked into financial habits and attitudes of 2,000 adults aged 18 to 40.
Of those who had a student loan and were saving for a home, seven in ten (70%) say their student loan makes it harder to save for a property deposit – equivalent to more than 1.5 million people.
Almost a third (29%) of all those with a student loan feel their student debt is holding them back from achieving their life goals. More than a quarter (27%) regret going to university all together because of the amount they owe.
It comes at a time when the average student loan debt of graduates in England reached more than £53,000*. For many graduates, particularly those on Plan 2 loans, their debt is growing despite repayments because high interest rates.
Gemma, a 22-year-old social worker living in Lincolnshire, is just starting out in her first career after graduating from university in 2025.
She said: “I started repaying my student loan last year, I’m currently paying back £48 a month. It feels almost like an added tax coming straight out of my pay cheque. When I worked out how much I’d repaid so far, I was surprised by how much that money could have added up in savings.
“I think student loans can be barrier for young people trying to get on the property ladder. Even if the monthly amount seems small, it’s still money being taken away from future plans. With the cost of living so high, every penny matters.
“This is my first job since graduating, and I’m trying to get myself set up, but the repayments just chip away at what I could be saving. If I wasn’t making those repayments, I’d be putting that money straight towards saving for a deposit and getting myself closer to owning a home one day.”
The research also found that, if their student loan was written off, almost all those saving for a home (99%) said they would put at least some of it towards this goal.
Gen Zs are particularly feeling the crunch, as almost half (48%) say they feel their student loan limits their financial options, compared to nearly a third (29%) of Millennials. Two in five (40%) of Gen Zs are worried about their student loan, compared to just over a quarter (26%) of Millennials.
OneFamily’s personal finance champion, Beth Tait, said: “There are already a huge number of barriers making it challenging for young people to buy their first home. It’s a big life goal and more needs to be done to help people achieve it. Right now, thousands are stuck in a ‘rent and repay’ trap – juggling high costs, as well as their student loans, making it difficult to put aside much at the end of the month.
“It’s worrying to see so many feeling stuck in a cycle that is difficult to break out of. There are solutions out there, like the lifetime ISA, to help young people manage their money and reach their life goals. But there is still much more work to do in terms of financial education and resources to help this generation save and build financial resilience.”
