The vast majority of higher education students are heavily in debt - but believe they will benefit socially and financially from their time at college and university.
The first comprehensive survey of student income, expenditure and debt also confirms that further education is cheaper for students than higher education.
By the end of the 2004-05 academic year, 79 per cent of HE students anticipated being in debt - the average sum being pound;4,653. This figure rose to Pounds 5,580 for those studying HE at university and fell to pound;2,125 for those on HE courses in FE colleges.
But only 18 per cent of FE students expected to be in debt at the end of last session - the average being pound;109 for that year. Income and expenditure were also lower for FE students.
Over four years at university, 86 per cent of students were likely to be in debt, the average on graduation being pound;7,561 but with a quarter owing more than pound;12,000. None the less, 80 per cent of HE and FE students felt they would benefit socially in the longer term, and 75 per cent felt their financial prospects would be better.
The Scottish Executive seized on the finding that Scottish students graduating this year had pound;2,740 less debt than those in England and Wales who graduated in 2003, despite most studying for a year longer.
This was attributed to different funding systems such as bursaries not being available south of the border two years ago, and students' different living arrangements such as the higher proportion living at home in Scotland (34 per cent, compared to 19 per cent in England and Wales).
Nicol Stephen, Lifelong Learning Minister, said that students with dependents, who face the highest living costs, have had their funding increased by Pounds 4.5 million; the maximum annual grant has risen to pound;2,395; and around 20,000 students receive the maximum young students' bursary.
But Fiona Hyslop, the SNP's education spokesperson, accused the Executive of fiddling the figures by leaving out students on the most expensive courses related to medicine. It also excluded the pound;2,000 students have to pay into the graduate endowment scheme to support less well off students.
The survey was carried out by Professor Claire Callender of London South Bank University, working with the Policy Studies Institute and NOP research. A sample was drawn from 20 FE colleges and 15 HE institutions, and face-to-face interviews were conducted with 832 HE students and 485 FE students.