People with student loans who are working towards a home deposit save almost £2,000 less per year than those without the debt, according to a new report by Barclays.
The bank also found that 44% of student loan holders claim that repayments limit their ability to build long-term financial stability, while 41% say it prevents them from entering the housing market.
The data coincides with renewed scrutiny of the student loan system after the chancellor, Rachel Reeves, opted to freeze the threshold at which loan repayments begin for three years from 2027.
The announcement in Reeves’s November budget led to widespread criticism, including from fellow Labour MPs, and led to the launch of a Treasury select committee inquiry, a ministerial review of options to ease the burden on graduates and a campaign by the consumer champion Martin Lewis.
Unveiling the select committee’s inquiry earlier this month, its chair, the Labour MP Meg Hillier, said: “House prices in my area are particularly high. You couldn’t possibly be a young person locally and look across the road and think, ‘I’ll buy that property that’s being built,’ because they’re £650,000 for a two-bedroom flat, or £750,000.”
She suggested high housing costs could partly explain falling birthrates in London, which are contributing to smaller school rolls and in some cases, school closures.
The Barclays study said: “For those actively building up a house deposit, there is a savings gap between those with student loans and those without.
“Individuals who have outstanding student debt report putting away £310 per month towards a deposit, whereas those without a loan say they save £473.70 per month, an extra £163.70.
“Over the course of a year, this puts debt-free individuals £1,964.40 closer to their savings goal than individuals who have a student loan.”
Graduates typically benefit from an earnings premium over their non-university educated peers. However, the gap has narrowed significantly over recent decades.
The latest official figures show an average annual salary of £42,000 for graduates and £30,500 for non-graduates. The average student loan debt in England has also risen to £53,000, reflecting changes to the system and rises in tuition fees.
Barclays said that many first-time buyers appeared to be attempting to reduce their house-buying costs elsewhere, including by increasingly targeting homes below the stamp duty threshold. It said its findings were based on two surveys of 2,000 consumers by Opinium Research.
Data in the report sets out that 68.5% of first-time buyer purchases in February 2026 were of properties priced under £300,000, compared with 60.9% in February 2025.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Rising external costs are reshaping how the UK approaches home ownership.
“Student loan repayments are slowing deposit saving for many aspiring buyers, while volatile energy prices are forcing households to think much harder about the long-term running costs of their homes.”
