At this moment in time, millions of people are finding their finances squeezed by a variety of factors, but among those who find themselves worst off in the UK are university students. Already reliant on Student Loans to help them get through, they were recently hit by a massive potential hike in tuition fees, which from September 2011 were capped at £9,000 per year.

Before then, the maximum amount that universities could charge for tuition fees was not far over the £3,000 mark, but a near-threefold rise in the cap has been viewed by students, families, lecturers and others involved in higher education as being highly controversial, but how did it start, and how have students’ finances been affected by the change?

Bowing to pressure

Back in 2010, there was a little anxiety among vice-chancellors around the UK about their respective universities’ finances. Raising the issue with the government of the time, they suggested that in order to plug any financial gaps left, they had to raise tuition fees. Eventually, the government took their side and decided to vote in higher fees, much to the dismay of students all over the country.

As soon as talk of the cap had been heard, protest were organised and critics of the new, higher fees began to voice their concerns as loudly as possible. Sadly for them, there was no turning back, although few universities initially opted to charge the full £9,000, with some newer, less established institutions willing to charge less in an attempt to attract poorer students.

Markets take dim view

Within just over a year of the introduction of higher tuition fees, concerns were no longer being raised just by those directly affected. Given the sheer number of people studying full-time undergraduate and postgraduate degrees in the UK, higher fees had actually played a part in a significant monthly rise in the Consumer Price Index (CPI), which largely determines inflation.

In October 2012, the CPI had risen by 0.5, and one of the major factors behind that rise was allegedly the astronomical rise in higher education costs. This was something the money markets didn’t react to too well – the Pound fell in value against other major global currencies as a result of the massive rise in inflation.

“The CPI jumped from 2.2 per cent in September due to the rising cost of university tuition fees. It now costs students 19.1 per cent more to attend university after the cap on charges was hiked by the government to £9,000 from £3,375″, according to City Index.

Debt levels rising

Inevitably, higher fees will mean one thing – higher debt. Prior to the cap being raised, typical student debts would have been in and around the £20,000 mark, but in 2012, that changed dramatically. The average level of debt that a typical university student would leave their course with rose beyond £25,000.

That news sparked rumours about some universities considering reducing their fees in order to make studying for a degree a more financially attractive proposition. As it happened, very few universities actually went ahead with it, while the majority of universities chose to raise their fees even higher than they were the previous year.

Yet more debt

Today, the situation for students who are still to get used to higher tuition fees is even worse as far as debts are concerned. Estimates suggest that the average level of student debt in the UK right now that graduates can expect to leave their course with is a staggering £39,000, which makes studying for a degree seem even more expensive.

This may give people who are still willing to take the plunge into higher education reason to consider counting the pennies even more. To help matters, the government have created a Student Finance Calculator, which helps students to gauge how much they will need to lend in order to finance their studies from start to finish.