Student loans inquiry finds many did not understand terms

However, most said they would not have been able to attend higher education without a student loan.

"Unfortunately, what these findings tell us is that far too many young people feel over-burdened and demoralised by their student debt," Dame Meg said.

The committee will now consider the different options before making some recommendations for change.

In its report, the committee states that there is a strong perception that "poorer and middle-income" students pay the most over their lifetime, while those with parental support paid fees upfront and avoided interest and lifetime repayment drag.

According to the survey, graduates doing the same job take home different pay depending solely on parents wealth, which is seen as "entrenching class inequality and undermining social mobility".

The report includes a selection of quotes from respondents.

One person said: "It's fundamentally unfair that students with wealthy parents can be bought out of paying interest on their tuition fees entirely.

"If I am on the same salary doing the same job as a wealthy graduate who paid upfront, I will pay far more for far longer compared to them. This means that my parents' circumstances have a profound effect on my debt and availability of money."

The report also states that student loan repayments "directly reduce mortgage availability", with many respondents reporting lower borrowing limits, delayed home ownership or mortgage refusals.

Monthly repayments, which the report states can be between £200-£600, can "significantly slow or prevent" saving for house deposits.

Another respondent said: "I was told it would be less than a phone bill and barely noticeable.

"I am now an adult paying back £100s a month. It was a complete lie. It's reduced my mortgage affordability, the amount I am able to invest or spend in the economy.

"What's been even more frustrating is the impact on my life outside education: this loan has reduced my mortgage affordability by almost £100k, I was told it would not affect my ability to get a mortgage, when in fact I was refused a mortgage on affordability grounds due to my student loan."

Respondents also said that the interest mechanics "were not explained" and that "terms have changed" retrospectively, which according to the report would be unlawful in FCA-regulated products.

They felt there were repeated claims of the loans being "like a phone contract" and "you wouldn't notice repayments".

The committee also published a compilation of student loan promotional material received from the Department of Education.

One document stated that tuition fee and maintenance loans are combined for repayment purposes, "to keep it simple" and the system is designed to ensure repayments "are always affordable".

A powerpoint presentation also compared a student loan repayment of £15 to other monthly costs, including £10 for clubbing, was based on a 2014/15 expenditure survey but the presentation was delivered for the academic year of 2020/21.

The Treasury Committee will report back later this year. The Department for Education (Dfe) has been approached for comment.