London graduates with student loans could take almost 10 years longer to save a house deposit than those without student debt, according to new research.
Analysis by British Business Funding estimates a London buyer repaying a student loan would need 27 years to accumulate a 20% deposit, compared with 17.2 years for somebody without repayments.
The study examined house prices, local earnings and student loan repayments to estimate how much graduates could save towards a deposit each year.
London recorded the largest estimated student loan “penalty” of the cities analysed, followed by Cambridge at 8.7 years and Oxford at 8.3 years.
DEPOSIT CHALLENGE
In London, the research assumes a £105,000 deposit based on an average property price of £527,100.
It estimates annual savings of £6,135 for somebody without student loan repayments, falling to £3,901 where repayments are being made.
Cambridge buyers face an estimated £93,000 deposit and could take 25.6 years to accumulate it with student debt, compared with 17 years without.
Oxford presents an even greater underlying affordability challenge. Buyers without student loans would still need an estimated 17.7 years to save a £90,000 deposit, rising to 26 years for those making repayments.
Elsewhere, the estimated student loan penalty stands at 6.3 years in Bristol, 5.5 years in Bournemouth, 5.3 years in Edinburgh and 4.4 years in Manchester.
The findings are based on a 20% deposit, meaning individual buyers could face considerably different timelines depending on the mortgage available, their household income, existing savings and ability to access lower-deposit products.
GRADUATE FINANCES SQUEEZED
A financial expert at British Business Funding says: “When income-contingent student loans were introduced in the UK, the assumption was that graduates would earn significantly more than non-graduates, making the repayment straightforward.
“A third of graduates now report that their degree did not improve their financial situation, and the same respondents overestimated their starting salaries by an average of 33%.
“In 2026, there are very few well-paid career paths without higher education, but those who cannot afford it without loans won’t be able to buy a house for decades, too.”
