The new student finance system explained

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From September 2006, Higher Education providers in England and Northern Ireland will be able to charge tuition fees of up to £3,000 a year. The exact amount will vary between course and institutions. But the good news is that you won't have to pay these up front. "All eligible students will qualify for a tuition fee loan that you don't have to start paying back until you leave your course and start earning over £15,000 a year," explains a UCAS spokeswoman, who adds that Wales is bringing in variable fees in 2007 and Scotland is doing its own thing.

"The system is better and fairer," says a spokesman for Higher Education action group Universities UK. "Students will not be hit with unmanageable debt. For example, if you earn £18,000 you would repay £5.19 a week."

Meanwhile, for rent and living costs, financial help comes in the form of grants, loans and bursaries. Means-tested maintenance grants of up to £2,700 a year will be available and you don't have to pay these back. Maintenance loans will also be on offer, with 75 per cent of the full amount available to all and the rest tailored to where you study and how much grant you get. The maximum annual amounts will be £3,415 for students living at home, £4,405 for those living away from home and studying outside London and £6,170 for students living away from home in London.

When it comes to bursaries, all institutions charging the full £3,000 must offer at least £300 to students on the full grant. However, the reality is that most places offer more and it's not unusual to expect an extra £1,000 a year if you're on the full grant. "From 2006, just over half of the students expected to apply to higher education are likely to benefit from over £350 million a year of extra money,"says Sir Martin Harris, director of the Office for Fair Access.

It doesn't stop there. Some examples of other sources of funding include the Parents' Learning Allowance, the Adult Dependents' Grant and the Disabled Student's Allowance. Finally, some courses struggling to attract students, such as teaching and nursing, offer financial incentives.

'Try to spend less'

Thuto Mali, 24, is in her second year at Goldsmiths College, part of the University of London. She is studying for a BA in media and communications

"Even though I really needed the extra money, I couldn't work in my first year because I was suffering with health problems, so the debt started accumulating. At the start of my second year, it got even worse because my student loan was exactly the equivalent of my rent. I was still unable to work, so I had no money for food, travel and books - let alone socialising!

I'm now at the end of my second year and things have improved. I was able to get some financial help from the local authority and from the university, although it took months to happen.

Also helping me get back on my feet is the fact that I've been really strict with my spending. I've managed to get a job that fits in with my health problems too. It only pays a couple of hundred quid a year, but it helps with the travelling.

I think I'll be okay in the final year, but it will still be a struggle. My advice to students would be to accept that you will probably come out of university with a lot of debt and therefore try to keep spending to a minimum from day one."

What to consider when opening your account

* Always pick a student account that offers free banking, the best interest rates and a sensible borrowing limit.

* A bank with a branch close by is handy, although being able to bank over the phone and on the internet make this less important.

* Many banks will offer interest-free overdrafts to students, but remember that you will need to pay the money back when your course ends.

* Consider the free gifts on offer to students opening up new accounts, but not at the cost of other benefits. Some banks lure students in with the promise of attractive graduate accounts instead, enabling you to repay your debt without incurring interest.

Top tips to help take care of your money

* Take time to decide on the best student bank account to suit your needs.

* Draw up a personal budget. It's essential to know what is going in and out of your bank account.

* Always deal with bills as they arrive. Where possible, pay them by direct debit.

* Online banking will save you time and allow you to keep on top of their outgoings. Banks such as Barclays have an online banking guarantee if students innocently suffer internet fraud. They guarantee to cover the loss - no matter what amount is taken from the account.

* Always think before you borrow and approach the Student Loans Company before anyone else.

* Never go over your overdraft limit without permission.

* Always speak to your bank if you are struggling.

How to deal with debt

Financing a degree is a difficult task for many students. The priority for any student experiencing financial difficulties is to talk to someone about it as soon as possible - there are plenty of people who can help, so don't suffer in silence! Struggling alone with your finances can be incredibly stressful and the longer the problem is ignored, the more likely it is to spiral out of control.

In universities and colleges, staff are employed specifically to advise students on how to manage their finances and stay comfortably afloat. Sometimes it can be hard to know who these advisers are, so NUS would always recommend that students contact their Students' Union. The Students' Union officers will be able to direct you to the people who can provide you with the expert advice that you need.

It is also worth taking a look at the NUS website, www.nusonline.co.uk/info/money/. The site is crammed with useful information, advice and ideas to help students manage their money. Veronica King, NUS

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