Graduates in the Midlands have the biggest debt in the country, owing an average of more than £15,000.
Student debt in the Midlands is even worse than in the capital where a typical graduate leaves university with the prospect of paying back £13,523, according to Barclays.
The reason for the region's high debt burden could be due to it having a high proportion of students from low income families who are unable to help financially.
Sarah Griffiths, West Midlands area convenor of the National Union of Students based in Birmingham, said: "Aston where I went and a lot of the other universities in the West Midlands have very good outreach schemes to reach students from low income backgrounds.
"I come from a low income family and so I have more debt than some of my friends who come from better off backgrounds purely because I had to take every loan and overdraft facility available."
The region's average debt of £15,338 is a £3,854 increase on the previous year and significantly above the national average of £13,501.
Ms Griffiths believes the surprisingly lower level of debt in London could be because the poorest students would not even consider studying in the capital.
"Maybe they are scared of London," she said.
"I am from a low income family and I wouldn't go there. Birmingham seems more reasonable cost of living-wise."
The Government plans to increase university tuition fees from £1,110 a year currently to £3,000 from next year.
Ms Griffiths claimed the introduction of top-up fees would put off people entering higher education, despite reforms postponing repayment until a graduate starts working.
Barclay's Graduate Survey reveals student debt in the region grew significantly last year from £11,484 in 2003 to £15,338.
Despite this, the proportion of students who feel " concerned" about their financial situation has fallen five per cent to just under a quarter (24 per cent).
Barclays' annual survey provides a insight into the £2.46 billion debt mountain shared just by the country's 183,000 students that graduated last year.
Faced with the cost of higher education growing every year, it appears a "mix and match" approach to funding is increasingly being adopted.
Nearly a quarter of students borrowed money from their parents, relatives or friends, owing on average £4,284 - more than double last year's figure of £2,096.
Half borrowed money from their main bank or building society, typically taking out a loan of more than £6,500.
But most still choose to take the majority of their loan with the Student Loan Company to take advantage of cheap rates.
A total of 87 per cent of Midland students owe on average £ 11,412 to the Government-backed agency.
One glimmer of hope in the region is an eight per cent drop in the number of students who are in debt from 85 per cent in 2003 to 77 per cent in 2004.
Experts believe this could be due to more graduates taking a year-off to earn cash before embarking on a university degree.
Barclays has predicted average student debt to rise to more than £17,000 with the introduction of tuition fees and £34,000 by the end of the decade. Jeremy
Law, head of student-and graduate banking, said: "As predicted, graduate debt is continuing its upward trend, due to a number of factors including rising living costs, and a more resigned attitude towards debt.
"If this trend continues, students starting a three year course this September could be graduating with debts of almost £20,000."