The debts aren't academic but students can stop them soaring

From state help to part-time jobs, the steps freshers can take to make ends meet
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The Independent Online

One week after A-level results, and teenagers across the country will probably still be celebrating, commiserating or clawing their way through clearing.

But as the hangover for this year's batch of soon-to-be freshers subsides, they face a sobering reality: the cost of being a university student and worries over loans and tuition fees.

New findings from NatWest suggest that those going to university this autumn can expect their three years of study to cost more than £33,500, while the average debt for today's graduates is £13,252.

As debt problems mount across swathes of the population, the National Union of Students (NUS) warns that thousands of graduates are among those falling behind with bills or at risk of serious difficulties because of their borrowings.

While most graduates struggle on and eventually clear the bills for their days in higher education, there are those for whom the debt issue won't go away.

"Problems can arise if students take on more borrowing commitments than they can afford to repay," warns Sue Edwards of Citizens Advice.

"This is particularly the case if their expected post-university earnings do not materialise."

"Some [graduates] suffer mental illnesses or psychological trauma because of this financial burden."

The debt dilemma is likely to grow more acute from this autumn when full-time students in England face the additional burden of top-up fees of up to £3,000; different fee arrangements apply in Scotland and Wales.

The NUS is concerned that fears of debt - and confusion over the new system of top-up charges - are deterring potential students from applying to university.

The latest figures show that applications for courses starting in September have dropped by 3.4 per cent on the same period last year.

"Students today are leaving university with massive levels of debt, and paying back student loans puts a major strain on their finances, says Wes Streeting, the NUS vice-president for education. "Top-up fees will dramatically increase the level of debts that students accrue while studying."

The NUS is also worried that because top-up fees vary between courses and universities, this could affect the decisions of applicants about where - and what - to study.

The importance of money, and making it go as far as possible, won't be lost on any new student. Here's our guide to financial survival.

Find support

Undergraduates can now apply for the new Student Loan for Tuition Fees, as well as maintenance loans to cover living costs.

In both cases the repayment rate is linked to the rate of inflation, currently 3.2 per cent, and the loans do not have to be repaid until graduates are earning more than £15,000 a year.

Depending on the course charges, students qualify for up to the full £3,000 to cover tuition fees.

They can also apply for means-tested loans to meet living costs; the amount borrowed will depend on their parents' income and the place of study.

New full-time students from lower-income households - those with annual earnings of £37,245 or less - could be eligible for a non-repayable maintenance grant. The maximum amount is £2,700 a year - for those whose parents have an income of £17,500.

Further to this, each university must also provide non-repayable bursaries for its poorest students.

If, for example, a university is charging the full £3,000 for a course, it must offer a bursary of at least £300 - to make up the difference between the maintenance grant of £2,700 and the top tuition fee.

Visit a student union adviser to make sure you're getting all the financial help you're entitled to.

Pick a part-time job

For the many whose parents can't - or won't - chip in with extra cash, extra earnings are vital.

One in five students do part-time work to fund their studies, says a report by the Association of Investment Trust Companies.

Students won't have to pay income tax on their wages as long as they earn less than £5,035 in the financial year running from one April to the next.

If this is the case, it's important to get hold of the P38 tax form, which exempts you from paying tax from day one. Your employer should have one of these forms but, if not, it can be downloaded from the Revenue & Customs website (www.hmrc.gov.uk). Alternatively, contact your local tax office.

Fail to get a P38 to the employer early and you will be hit with a 22 per cent "emergency tax" code and have to fill in more forms to reclaim the money you've paid to the taxman.

Don't forget that you will pay national insurance contributions if you earn more than £97 a week.

Get a good student bank account

Look beyond gadgets such as portable video players to gauge the real value of a student bank account.

Check the level of the interest-free overdraft, the interest rates on offer on balances in the red, and the penalty charges levied for unauthorised overdrafts.

The student account provided by the Halifax has been recommended by a number of financial advisers. Out of all the lenders, it offers the biggest interest-free overdrafts in both year one of a course (£1,750) and year three (£2,100).

Check whether your bank will increase your overdraft later in the academic year - and what will happen if you need to exceed this limit.

Unauthorised overdrafts can prove expensive, so make sure you know the rates and charges. HSBC levies interest at 14.8 per cent but it can soar to 32.92 per cent with the Co-op.

Further to this, make sure you take advantage of discounted deals for students, such as the Young Person's Railcard.

The NUS has also just launched a new card for students, the NUS Extra. Available from September at an annual cost of £10, this offers discounts on purchases made from a range of 38 partners, including Amazon, HMV, Lonely Planet and TopShop.

If things go sour...

Despite your best efforts to budget carefully and spend wisely, you may still find yourself steeped in more debt than you can manage. If so, don't panic and don't ignore the problem; seek help as soon as possible.

Your student union, or staff at Citizens Advice , will be able to offer free help and work out affordable repayment plans.

Although more graduates have declared themselves bankrupt as a way of wiping out some of their debts, it's no soft option.

By going through bank- ruptcy, you put your ability to obtain other forms of credit - a mortgage, say, or loan for a car - in jeopardy for six years until the mark is removed form your credit record. You may also find that the doors to a wide variety of careers - in finance and law, for example - are harder to open.

Note that student loans are not wiped out by bankruptcy and must be repaid in full.

'I want to start work with a clean slate'

Blair Scott, 18, from East Lothian, will start a five-year engineering course at Heriot-Watt University in Edinburgh next month.

As he will be studying north of the border, his fees will be paid by the Student Awards Agency for Scotland. But he will have to pay his own accommodation and day-to-day living costs.

"I am going to spend the first year of my degree in halls of residence - and my parents are helping to fund this," he says. "But I am going to fund the rest of my living costs myself."

He has already sent off a few applications for part-time jobs - mostly to city centre retail outlets. "I plan to take a weekend job so that the work won't interfere with my studies."

But he is still worried about budgeting and managing his finances.

"I've not been all that good at it in the past, and have heard so many stories of people spiralling into debt and then struggling to get out of it. I don't want that to happen to me, and hope I can keep my debts to a minimum so I can start working life with a clean slate."

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