The study of 2,000 university students and sixthformers, the first carried out by a bank and a university, shows that one-third of students are in debt most of the time but do not know what to do about it.
Students in the project by Exeter University and National Westminster Bank had little idea of what was an acceptable level of debt or how to manage money. About three-quarters were in debt at some time. Two-thirds, however, owed under pounds 500, excluding their student loan.
Many students did not adjust their spending to their means. They simply piled up bigger debts.
More than 60 per cent of student budgets is spent on necessities such as rent, food and clothing and 32 per cent on social and leisure pursuits.
About 7 per cent is connected with academic work.
Most students did not count their student loan as debt and did not realise how much they owed until after they graduated. Of recent graduates, 43 per cent had debts of more than pounds 1,000, generally including their loan.
Sir Geoffrey Holland, Exeter's vice-chancellor, said: 'The student loan facility falls short of many students' borrowing requirements. Too little has been done to help them find a financial route through their studies.'Reuse content