Student finance: Why the money matters

The expense of studying need not scupperyour finances. Lucy Tobin offers some advice on staying afloat

When I started university, one of my fellow freshers spent hundreds of pounds in our first week on campus.

At every party, he was the one buying everyone drinks; at the freshers' fair, he was the one paying membership fees at every booth; in lectures, he was the one who owned a set of sparkling new textbooks. He seemed to be a millionaire. But the truth soon came out – he'd just spent half of his loan.

Don't be that guy. Sorting out your finances might not be as exciting as other pre-uni preparation, but it's hugely important. The first thing to do is to make a budget. Calculate your total costs and outgoings and give yourself a spending limit each week. But that's not easy when you haven't even worked out how much your loan is worth, let alone the entrance fee for the hottest student club – so here's a helping hand.

Things you have to pay for

Tuition fees

Let's get the bad news over with first: the maximum tuition fees (sometimes known as "top-up fees") for students in England and Northern Ireland starting a course in 2009 are £3,225 a year. (It's different for the rest of Britain – see below.)

Now, on to the good news. First, you might not have to pay the full amount – it depends on your household income, which normally means how much money your parents earn. And, even better, you don't have to pay these fees now. In fact, there's no requirement to pay them back until after you have graduated, and found a job that pays more than £15,000 a year. Instead, you pay for tuition fees via a tuition fee loan, which is available to everyone, and which you can apply for now (see below).

If you live in Wales, tuition fees are slightly different. Non-Welsh students studying at Welsh unis pay full tuition fees (again, up to £3,225), but Welsh students who attend a university in Wales only have to pay up to £1,285. However, if you're a Welsh student who has decided to go to a uni in England, Northern Ireland or Scotland, bad news – you must pay the full fees of that country.

There are even more provisos in Scotland. While Scottish students studying at Scottish universities do not have to pay any fees, students from the rest of the UK who go to Scotland to study do have to pay full Scottish fees – although these are cheaper than elsewhere in the UK. Most courses cost £1,820 a year, while medicine degrees cost £2,895. And if Scottish students decide to leave home to study elsewhere, full fees of up to £3,225 a year will apply.

Living costs

If you're studying at a uni far from home, or have always looked upon student life as the time when you get away from home, one of your biggest costs will be accommodation. Even the nastiest hovel will cost upwards of £50 a week, and students in big cities such as London can pay more than £100 a week.

It can be tempting to go for the cheapest possible rent, but remember you'll normally be signing up for a year-long contract and will want to be happy, so don't book yourself into unsafe or just plain horrible lodgings. Anywhere too far from campus is a bad idea – you'll just end up spending any money you save on transport.

How much will accommodation cost? It depends on what you opt for: university halls; private halls; private flats or houses; or living at home. The last option is the cheapest, while university halls of residence offer the next best value. These are single rooms or flats that you share with other students. Rent in this instance normally includes everything from utility bills to internet access.

Private halls, run by companies such as Unite and Cosmopolitan, are springing up in many uni towns. They're normally much plusher, with better fittings and concierge receptions, but can cost up to £400 a week (university halls are more like £40-£100, according to the National Union of Students), so think twice about whether you can afford it.

Private housing is what most students opt for after the first year. The cost will vary wildly depending on location, size, condition of the property and so on. Also remember to factor in the extra cost of household bills, and maybe other costs such as a television licence, as well as the fact that you'll probably have to pay for a full 12-month tenancy.

How to afford it

Loans

A loan is available to all students to fully cover the cost of tuition fees – but you do have to apply for it. The application process depends on where you live, some local councils run it themselves, others use the Student Loans Company. Find out which scheme covers your area by contacting your local council.

Maintenance loans of £4,950 help cover the cost of living. Everyone can receive 75 per cent of the maximum amount, but receiving the extra 25 per cent depends on your household income or where you are studying (London students can receive more; and certain circumstances, such as if you're married, over 25, have a baby, or have been supporting yourself financially for three years or more, can affect the amount of the loan you receive).

Employment

Many students juggle a job with study. It doesn't have to be a time-intensive regular gig in a shop, office or bar – consider babysitting, gardening or other impromptu jobs to earn cash. Try not to work more than 15 hours a week in term time, as it will begin to impinge on study time. Remember, if you're a student and are earning less than £6,475 a year, ask your employer to fill out form P38(S), so you don't have taxes deducted from your wage.

Grants

Some students might be eligible for a grant – that's money you don't have to pay back. The Government offers maintenance grants to some students whose household income is less than £50,020, although the amount you receive is related to your personal situation. You can apply through the main student finance application. The Special Support Grant is also available to single-parent students, or those with certain disabilities. You might also find that local charities, educational trusts or even your old school offers grants to students, so ask around. Look for funding information in your local library. Most unis also offer hardship bursaries to students whose families have low incomes, so speak to the finance officer.

Sponsorship

While you're having a chat with the finance officer, it's a good idea to bring up sponsorship too. Some workplaces, including the NHS, armed forces and big companies (such as accountants PricewaterhouseCoopers and Deloitte) give students a small wage throughout university, usually on the basis that they work for the firm before or after university, or during holidays.

Parents

Well, it's worth asking. You might want to offer your cleaning skills, babysitting time or computer lessons to sweeten the deal. But if they say no, don't be too gutted – their finances have probably been crunched by the recession.

Overdraft

Don't snag a student account just because it's offering a free MP3 player – by the end of the year it will be interest-free cash that is more useful music to your ears. Pick up a student account according to the size of the overdraft – that's an amount of money that banks will lend you. According to financial website Moneyfacts, opting for an overdraft offering an extra £1,000 interest-free cash could save you £99 per year, compared to a student bank account charging interest at a rate of 9.9 per cent for authorised borrowing. Avoid hefty unauthorised overdraft costs by checking your balance regularly – signing up for online banking can help with that.

Lucy Tobin's book, 'A Guide to Uni Life' (Trotman, £9.99), will be available to buy from 21 August