Student finance: money matters

On average, students come out of higher education with around £17,500 worth of debt, but this need not be as scary as it sounds. By taking the available student loans and grants and making the right choices with your banking, this debt can be kept in check. Above all, good budgeting throughout your university years means you can have a big say in how your finances will look when graduation time comes around.

Loans

If you are an eligible student studying in full-time higher education in the UK, you can take out a loan to cover your tuition fees.You can also take out a student loan to help pay accommodation and living costs. You will not have to start paying these back until the year after your course has finished, and until you are earning at least £15,000 a year. The interest on student loans is linked to the rate of inflation so, in real terms, what you repay will be broadly the same as what you borrowed in the first place.

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While you are applying for these, you can also seek grants supplied by the government for both tuition fees and maintenance costs. Grants of up to £2,835 are available for 2008/2009; these are staggered depending on the level of income your family earns. If your family income is £25,000 and below, you are eligible for a full grant; if they earn up to £30,000 then it is £2,002, and so on. Even families earning up to £60,000 a year can receive a £50 grant. Of course, the major benefit of these grants is that you don’t have to pay them back!

“As student finance now offers considerably more than repayable loans, [such as] grants and bursaries, people should make sure they don’t miss out on available funding that they won’t have to repay, and should seek out all the detailed information on the various websites, ”advises Ian McLaren Thomson, a spokesperson for the Student Loans Company (SLC).

Most universities now offer a system where, depending on the fee structure, they will be able to help with both tuition and maintenance costs in the form of a bursary. The Government allows them to charge a maximum fee, but only when they have formally signed up to provide bursaries and scholarships for students who are less well-off.

Bear in mind that there are separate systems of loans and grants for each country in the UK, and each differs slightly. For example, Scotland does not charge tuition fees, whereas in England, Wales and Northern Ireland, tuition fees are around £3,145 a year. However, these can vary depending on what course is being studied and what university is being attended. It is important you know your fee structure.

Student loans and grants are paid into your bank account once you enrol on the course. Payment is released by the SLC when confirmation of attendance is received from the university. Tuition fee loans are paid direct to the university; maintenance loans and grants are paid in three instalments at the beginning of each term (except in Scotland, where they are paid monthly).

Banking

It is important that you are not drawn to a particular account because of the added incentives that may be offered in the form of free stuff or discounts. This is a financial decision, so think numbers and numbers alone. “Look for the account that offers the cheapest overdraft and the lowest fees – the one that makes the most financial sense,” says Robin Amlot, senior editor at Moneyextra.com Flexibility is also a bonus: online and phone banking means that you will be able to stay in control of your account. Be constantly aware of your account and balance, as this will reduce the chances of sudden changes when you least expect it.

Don’t be afraid of asking for assistance from your bank either; they are the experts, after all. You can generally expect an overdraft on a student account and a four-figure facility will come in very handy, but it is the conditions of this that are crucial: lower rates of interest – or, even better, none at all – will be of huge benefit in the long term.

Budgeting

This may be the first time that you have had to deal with large sums of money and decide what to do with it. Whatever your situation, looking after your money while at university is going to have a huge part to play in how much debt you come out with at the other end.

Don’t allow these decisions to get on top of you though; there is a wealth of online assistance on how to budget effectively (see the Web Watch box on the right) and spending a little time considering where your money will be going before you start can reap many benefits in the long run.

“When you’re preparing to go to uni, freshers’ week, moving in and meeting new friends is higher on the list than finance,” says Jemma Samuels, online manager at Uniaid.

“However, if you can spend a bit of time thinking about your budget before you go, it will make such a difference later on. Housing will be the biggest cost, but students always tell us that they are amazed how socialising and shopping costs really build up over the year.”

It’s also worth thinking about the money coming in; the opportunity to earn additional cash is always there. Some courses have a placement year that offers earning potential, while a part-time job that you can fit around studying can ease your debt burden massively. Think creatively: a bar job in the student union will offer financial rewards twinned with social benefits, for example; a job in a restaurant brings in money and may supply you with cheap or free meals.Don’t forget those student discounts either.Grab all you can – after all, they aren’t going to last forever!

Web watch

Student Loans Company

Information aplenty about loans, grants and bursaries. Also good links to other important student bodies, including Student Finance Direct www.slc.co.uk

Uniaid

Aimed at helping students cope with the financial barriers to higher education. Includes an online calculator to assist with budgeting decisions www.uniaid.org.uk

Moneyextra.com

Personal finance website that covers 90 per cent of the market. Compares the various student accounts to allow you to make the right choice www.moneyextra.com/banking/studentaccounts.html