Keep cool over cash concerns

Loans and bursaries will provide you with much-needed finance, but it’s how you organise your spending that makes all the difference, says Chris Green
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The Independent Online

One of the best things about university life is, undoubtedly, the sense of independence it offers. As a student, you are freed from the constraints of school timetables and nagging parents, and are left to organise and manage your life in a way that suits you. But in order to deal with this sudden liberation and enjoy it to its full, there’s no getting around the fact that you’ll have to be organised. With nobody there to take responsibility for you, it’s up to you to take control – and one of the first things you’ll need to master is your finances.

Tuition fees

The amount of money that students have to pay to attend university has become a much-publicised subject, mainly due to the Labour Government’s decision to introduce top-up fees in the 2006 academic year.

This effectively gave universities the right to charge students as much as they wished for a year of study, up to a maximum amount set by the Government. This figure seems to creep up every year, but for students starting this autumn, the cap is £3,145 per annum.

The good news is that you definitely won’t be charged any more than this; the bad news is that almost no universities set their fees any lower. Do a quick calculation and you’ll soon discover a rather frightening fact: if you’re enrolled on a three year degree, the total cost of your education could approach £10,000. Fortunately, this is where your student loan comes in.

The student loan

If you’re heading to university within the next few months, you’ll almost certainly have applied for a student loan already, and can expect to see a large amount of cash appearing in your bank account shortly after you arrive at university.

If you’ve just embarked on a gap year and don’t plan to start studying until next autumn, it’s easy to forget all about applying for your loan and miss the deadlines in March: you’ll still get the money, but not until long after everyone else. According to Ian McLaren-Thompson of the Student Loans Company (SLC), the sooner you apply, the better.

“We try to make things as simple as possible for the students,” he says. “The first thing they should do is get their application in as early as they can, because if they meet the deadlines, we’ll guarantee to get them their loan in the first few days of term. It’s better not to be a ‘tail-ender’.”

The first part of your student loan will be sent straight from the SLC to your university to cover the cost of your tuition fees, which is handy since it means you don’t have to worry about transferring the money yourself. The second part of your loan, often called the maintenance loan, is very different.

This portion of money is intended to help you with your living costs. The sum could be as much as £6,475 if you come from a low-income household, but since everyone is entitled to 75 per cent of that figure regardless of their background, you can count on receiving at least £4,800. If you’re really struggling, you’ll probably qualify for a non-repayable bursary. These will be dispensed by your university rather than by a central government body, and are almost always means tested.

The final thing to remember about the student loan is that you don’t have to start paying it back until you’ve finished your degree and are earning a salary of more than £15,000 – even then, the regular payments are fairly low.

Money management

Seeing vast sums of money appear in your current account might feel great to start with, but then you’ll realise that the money has to last you a long time.

Drawing up a budget is highly recommended: a simple spreadsheet with a list of how much you’re spending on what each month will ensure that you don’t lose track of your finances and end up firmly rooted in the red. Some student money advisors argue that the best way to manage the maintenance part of your loan is to set up two bank accounts.

You can transfer the whole sum into one of them, and then set up a monthly standing order to feed into your current account, so you’ll know as soon as you start overspending. Before you arrive, it’s definitely worth doing some research into student bank accounts, since they are likely to have that all-important interest free overdraft.

“I think young people nowadays are quite savvy consumers who know how to scour the internet for the best deals from the banks,” Says Gary Davis, director of student recruitment at London South Bank University. “The most important thing is to see through the ones which give out useless gifts but don’t offer great value elsewhere.”

Earn as you learn

The best way to smooth your financial trail through university and beyond – especially in these times of economic uncertainty – is to get a part-time job. Even if it’s just working for a few hours a week as a bartender, the money you earn can be spent on going out and enjoying yourself, leaving more of your loan to go towards essentials such as food and rent.

If you’re studying at a city university, finding work shouldn’t be too difficult, and many institutions actually offer their students part-time jobs which they can fit around their degree. This might involve helping the careers service by visiting schools, or just doing some administrative work for one of the university’s departments.

Either way, it’ll help you pay the bills. “Working while you’re a student is very much a part of life now,” says Davis. “Even students from Oxford and Cambridge who are encouraged not to get jobs in case it distracts them from their studies have started doing it. It’s a good idea for students to work for their university, because often they’ll be better paid than those in the commercial sector, and the staff will be more understanding when it comes to assessment time.”

Accommodation and food

The lion’s share of your maintenance loan will probably be spent on rent and food. The choice of accommodation in first year is likely to be fairly limited, but a growing number of institutions are opening new halls of residence with premium rooms aimed at students who are slightly better off.

If you’re hard up, these should be avoided: instead, go for shared rooms in the older buildings. You’ll also need to decide whether you’d rather stay in catered or selfcatered accommodation.

Although self-catered might be cheaper, you’ll have to fork out more money for groceries. Either way, as a fresher it’s probably best that you stick with university housing – it’s the best way to make friends and will usually provide the best value for money anyway.

If you do have to live out in a rented flat, as will probably be the case in your second year, prices will vary dramatically. Planning ahead and leaving time to shop around for the best deal will save you a vast amount of money. As long as energy prices continue to rise, finding a flat which has the bills included in the rent is a definite bonus.

My story: how I manage my money at uni

Victoria Jordan, 21, has just completed the second year of her BA in media arts at the University of Plymouth.

I’ve got a loan for my fees, a maintenance loan and a maintenance grant. I lived on my own for about a year before I came to university anyway, so I was already aware of the need to set aside money for bills and food. In saying that, having such a big chunk of money all of a sudden just makes you want to go shopping. You’re in a new area too, so it’s pretty exciting.

When I had a job it was easier, because it was all going as soon as I was earning it. My loan pretty much covers my rent, and then I have the grant on top of that, which is mine to spend on what I like. I did buy an iPod, and I also had to spend quite a bit on my camera, since I do a technical course.

I went without a job for the first term, but by the time it got to the second term I realised that my timetable wasn’t that full, and that there was time to do a few hours here and there. I also thought it would be nice to have a bit of extra money, because in the first term I did go a bit crazy and went out a lot.

Before term started, I sat down with my granddad and worked out exactly how much I had to spend every week, but that went completely out of the window at the freshers’ fair. Now I’ve started paying some of the money from my job into a savings account, so I can use that for emergencies. I definitely know how to handle my money a lot better now – I’m still not great at it, but I’m definitely getting a lot better.

Pete Jones, 21, has just completed the first year of his BA in religion and theology with philosophy and ethics at Liverpool Hope University.

I have a student loan which pays for my tuition fees, and a maintenance grant on top of that. I’ve actually been very disciplined with it so far. I’ve kept a logbook of everything that I’ve been spending, all my outgoings and incomings, so I can keep a track of it all. Obviously if I go and get a pizza or something, I don’t bother writing that down, but if I take out anything substantial I do keep a note of it, so I know where it’s gone. Speaking from experience, it’s easy to let money run away from you.

Getting such a large amount of money in your bank account is pretty daunting to begin with, and often you’ll check your balance and think that you’ve got loads of money to do a lot of things with – but obviously that’s not the case. Paying it all back is in the back of my mind, but it doesn’t tend to bother me too much because I know I shouldn’t have any problems doing that once I’ve graduated and got myself a job.

The maintenance grant is the money I have to manage. It pays for my accommodation and food, but because I have a job alongside my degree, I can use that income to buy other things such as clothes and CDs.

New students should think about getting a part-time job once they’ve settled in. It has worked out really well for me this year, so I’m definitely going to keep at it.