Contents:
1. Student loans Student bank accounts Managing your money
A recent study by the National Union of Students (NUS) estimates that students will pay an average of £21,440 in tuition fees, books, equipment, rent, travel and other living expenses in 2013/14. Meanwhile, students in London will have to fork out an additional £13,747 a year.
As well as explaining the basics of student loans and bank accounts, this guide aims to give some practical hints and tips about money management, with advice from experts and university students. If you’re smart about the way you manage your money now, your time at university will be more about the fun times than the bread line.
Student loans
What is a student loan?
While this will probably seem like a question to which you already know the answer, just bear with us.
Student loans are made up of two standard elements: a tuition fee loan and a maintenance loan. You can apply for these loans through a government body known as Student Finance England (or Wales, Scotland or Northern Ireland). Any loan you receive will, confusingly, be paid out by an organisation known as the Student Loans Company.
It may seem a bit convoluted, but Student Finance and the Student Loans Company are both government-run and owned. It’s simply that one deals with the administration side and the other is responsible for paying out the loans.
The amount of money you receive depends on what course you are studying, whether you live in halls or at home, your parents’ income and even what nationality you are. For example, If you’re lucky enough to have been born in Wales then you only pay a maximum of £3,865 a year towards tuition fees, wherever you study in the UK, because the Welsh government pays the rest in the form of a grant. If you’re a Scottish student studying in Scotland, the Student Awards Agency for Scotland (SAAS) will cover the cost of your fees.
Why do I need one?
In England, Wales, Scotland and Northern Ireland tuition fees pay the people who lecture you as well as cover the costs of some of the facilities you will be using while at university. Those fees have risen to as much as £9,250 a year – which is £27,000 over the course of a standard three-year degree – as a result of huge spending cuts and new government legislation. So unless you’ve won the lottery, it’s unlikely you’ll be able to afford to pay upfront to study as well as fund the costs of living.
It all seems a bit daunting – do I really have to take a loan out?
Student loans are very different to most loans. It’s not like taking out a payday loan from Wonga. In fact, the best way to think about student loans is to think of it like a form of tax. It doesn’t affect your credit score and it’s only when you’re earning over £25,000 that you’ll start paying it back in affordable monthly chunks. Also, 30 years after the day you graduate, you’ll automatically have your remaining loan debts written off.
You should also think of your loan as an investment in your education. As you’re ultimately responsible for paying for some of the lecturers and the facilities you use as a student, you have the right to expect more from them – perhaps more so than your parents did when the government funded their education for free.
When’s the best time to apply for student finance?
You don’t have to have chosen which university you want to go to before you apply, which is why it’s best to apply as early as possible. If you are intending to start a course beginning in September 2018 you need to apply online at https://www.gov.uk/apply-online-for-student-finance by 30 May 2018.
Student finance – what’s available?
Here’s a brief breakdown of the student finance you may be entitled to from the UK government.
Tuition fee loan
What it’s for: Goes towards funding the cost of your degreeHow much do I get: Up to £9,250 a year. (or £9,000 if you study in Wales)When do I get it: You’ll never see this money, as the student finance company will pay it directly to the university.When do I pay it back: Once you graduate you have to be earning over £25,000 a year in order to start paying back your loan.How much do I pay back: You are expected to pay the full amount of your loan back to the government, plus interest. You will pay back your loan in monthly instalments and the amount you pay back will vary according to how much you earn. However, if after 30 years you haven’t paid enough back, your loan debt is written off.Top tip: Make sure you find out from your university how much their tuition fees are before you apply for student finance – that way you won’t run the risk of not being awarded enough.
Maintenance loan
What it’s for: It is designed to help with the cost of living at university. It’s there to help pay for your rent, food, books and equipment, and other university living essentials.
How much do I get: Unlike tuition fees, the Student Loans Company decides how much maintenance loan to pay to you. That’s because how much money you receive is based on a number of factors including where you study, where you’re living and how your course is structured (see the table below for a breakdown).
When do I get it: The maintenance loan is paid directly into your bank account in three instalments over the academic year.
When do I pay it back: You pay your maintenance loan back at the same time and under the same terms as your tuition fee loan.Top tip: Take the time to explain to your parents what information you need about them in order to successfully apply for the right amount.
Source: Student Finance England NB: These figures apply only to students studying in England
Grants
What it’s for: To help students whose parents earn less than a certain amount.How much do I get: Because it is an income-contingent grant it varies (see the table below for a rough guide to grant amounts).When do I get it: Like the maintenance loan, your maintenance grant is paid directly into your bank account in three instalments over the academic year.When do I pay it back: Because this is called a grant rather than a loan, you won’t have to pay it back.Top tip: You must remember that the grant shouldn’t be seen as a “top up” on your maintenance loan. In fact, if you get a maintenance grant, the amount you’re awarded for your loan will actually go down. The amount of maintenance loan you get decreases by 50p for every £1 of maintenance grant you receive. For example, a student studying at the University of Nottingham who is living in halls and has been awarded a £500 grant will receive a £5,305 maintenance loan – £250 less of their maintenance loan than if they did not receive a grant. While it might seem odd, it actually means that you’ll be expected to pay back less to the government as a result.
Source: Student finance England NB: These figures apply only to students studying in England
Other finance
There are also bursaries and scholarships available to help fund your way through university – you can search for these on Whatuni’s Uni Scholarships
If you have a specific learning difficulty such as dyslexia, a mental health condition or even a long-term illness then you will be eligible for the Disabled Students’ Allowances (DSAS). This allowance will help pay towards any special equipment you need in order to complete your studies and doesn’t depend on your income.
There is also a special support grant available for students in special or unique circumstances. For example, if you’ve had to take time out of your degree due to an illness and wish to return, you may be eligible for a special support grant. You can be awarded up to £3,387 depending on your household income. Unlike the maintenance grant, this grant will not affect the amount of maintenance loan you receive. But remember – you can’t have a special support grant as well as a maintenance grant.
If you are required to travel as part of your degree course – for example, if you have a clinical placement or have to study abroad – then you will be entitled to the any additional travel costs over £303.
There are also the many other grants including a Childcare Grant, Parent’s Learning Allowance, and an Adult Dependants’ Grant.
What is a student account?
The top high street banks offer special accounts that are only available to students. They typically have what is known as an “arranged overdraft facility”, which means that you will have access to up to £3,000, without any sneaky interest charges. So for example, if you have £50 in your student account and a £1,500 overdraft facility, you will have access £1,550.
If you open a student account you’ll be able to apply for a credit card, but be careful; no matter how the banks package it, it’s not free money. You WILL have to pay it back, and you WILL be charged interest for anything you don’t pay back on time. READ the terms and conditions of your credit card agreement. On the plus side, credit cards are great for booking holidays, as you have the extra security of getting your money back if anything goes wrong – if the travel company goes bust, for example.
Why do I need one?
Funding your time at university can be hard, and often your maintenance loan isn’t enough to cover the costs of living, especially in areas like London. A student account with an interest-free overdraft facility is a useful addition to university funding.
“Whilst we would not encourage students to get into debt with an overdraft and it should not form part of their budget, interest free overdrafts can be useful to cover unexpected expenditure,” says Peter Dunn, Head of Communications at the University of Warwick.
But remember, always spend within your means. Jess Hawker, Money Specialist at Leeds University Union says: “A lot of students also find taking an interest free overdraft as a useful way to manage cash flow. This can be very effective but it is important to remember that you will have to pay it back (and try to do so before they charge interest). Also, avoid other forms of interest charging credit as that can lead to a spiral of debt.”
Nat Burnett, a student at the University of Warwick, adds: “A major mistake people often make early on is relying on their bank account overdraft as a safety net, when in reality it's anything but. If student loans are the best types of debt, with highly favourable interest rates and repayment conditions, overdrafts are the opposite. Know exactly what key terms and conditions you have signed up for – otherwise you might easily find that extra little indulgence brings a flood of bank fees you could and should have avoided.”
How do I apply for a student account?
To open a student account, you will need to be over 18. Most high street banks will ask you for the following things when applying for a student current account:
- Proof of ID (passport or driving license or birth certificate)
This is not an exhaustive list, so be sure to check with the bank you’re intending to open an account with before you begin the application process.
When’s the best time to apply for a student overdraft?
It’s best to get your student account up and running before you set foot in university halls. Even better, make sure you’ve arranged your student account before you apply for your student loan – preferably after you get your A-Level results and have chosen your university. That’s because your maintenance loan and any grants, bursaries or scholarships you’re entitled to will be paid directly into the account you have listed on your student loan application form.
How do I choose which bank to go with?
While there are so many websites and articles telling you which student account you should apply for, the decision ultimately comes down to you and your personal preferences. Many students tend to open an account with the bank their family use, but that doesn’t necessarily mean you’ll be getting the best deal.
One thing you’ll become expert at while at university is sniffing out the offers. So with that in mind, we’ve listed the student accounts offered by the top high street banks. Make your own mind up and do some research…
Introduction
Financial independence, in any form, is exciting. But it also comes at a time when there are loads of other things you need to be thinking about. “Students often don’t know where to start and are intimidated by managing their money,” says Jess Hawker, Money Specialist at Leeds University Union.
When it comes to guidance, a spokeswoman for the NUS explained that they have an advice section on their website and publish a range of reports and guides for unions on how to help affected students. However, she added: “Individual students’ unions should be a student’s first port of call for advice or if they have a problem.”
That’s why Universities and Unions like Leeds offer money management advice to help you get your finances straight, and make sure you have enough money to last you through the year.
“At Leeds University Union we have tips and advice online to help. We also offer personalised advice that students can access by contacting the Advice Centre directly. I recommend any student who is worried about money of confused by their finances to get in touch with their local Student Advice Centre,” says Jess.
The University of Exeter provide support through the Guild Advice Unit for students who need help budgeting and managing their money.
Meanwhile, the University of Warwick provide online budgeting advice and tips on how students can make their money go further. “Warwick also have a budget calculator so students can get an idea of how their finances will work when they come to University,” says Peter Dunn, Head of Communications at the University of Warwick. “We also give out budgeting guides to all new students as part of Open Days and Enrolment, and students are able to come and see us with any particular concerns.”
“Every Friday and Monday, the University of Huddersfield send mail shots to remind you about the kind of student services on offer,” says Dani Calvo-Westcott, a student at the university. “For example, they offer advice about money and encourage students to come by and have a chat. Huddersfield also have something called ‘Back on Track’ to help students who have troubles – financial or emotional.”
Below we’ve compiled some basic money management tips to help you get the most out of your pounds…
Budget, budget, budget
“In my experience one of the common concerns for students is about making ends meet. Sometimes it’s hard to predict what your outgoings will be and there can be long stretches between Student Finance payments,“ says Jess.
“A big struggle is finding a benchmark for your costs. It’s difficult to work out what you can and can't afford without going around Tesco and having to make those kind of choices,” says Nat Burnett, a student at the University of Warwick. “Budgeting is essential, but you'll only learn how to do it from experience.”
The first challenge is dealing with the whopping great chunk of loan money that will land in your account in September. While it may be more money than you’ve ever seen in your life, in the grand scheme of things it’s not that much, and you’ll have to make it stretch out over the term.
“It’s important that students are aware of the competing demands on this funding, including their rent, bills, travel etc. It is very easy for them to spend freely in the early weeks of the year only to find themselves in financial difficulty as the term progresses,” says Emma Stephenson, Head of Widening Participation and UK Student Recruitment at the University of Exeter.
Part of the problem students face is to do with organisation. “Like almost everything in life it is taking the time to plan and making sure everything is done in a timely manner,” says Peter.
The first thing Dani does is take away the cost of his rent and see how much he is left with: “Then I try and work out what I need for basic necessities like food, clothes and maybe some stuff for uni.” He adds, “usually, I work out an average of what I can have a month and break it down into weeks.”
Typically, that means Dani budgets between £20-30 a week. “Sometimes, if I have money saved over from the previous week, I pass it on to the next and can spend a little more.”
On the tiles
There’s no denying that a large part of UK student culture is going out. Whether it’s going to the cinema, clubs, bars or restaurants, there are plenty of offers to tempt students to spend their limited pool of cash.
Freshers’ Week in particular is a huge cash drain for students, who are prepared to spend whatever it takes to have the best fancy dress outfit, buy drinks for friends or stock up in the TopShop sale. However, this reckless spending can leave a big dent in your finances that you’ll end up regretting later in the term.
“Overspending is a common mistake we all make as students,” admits Dani. “For example, when you go out on a night out you think ‘I’m going to take a tenner out’, but when you’ve had a few drinks you can spend £30-40 without even realising.
“Before a night out I make sure I take some cash out and leave my card at home so I know I can’t spend any more. And it works, because regardless of what you do, you can’t spend any more!”
Work it
“When it comes to balancing income and expenditure, part time work can be a great way to help with finances and also gain skills and experience for life after your degree,” says Jess. It might be the last thing you want to read right now, but any kind of paid work is worth doing either while you’re at university or in the holidays.
When you graduate, having any kind of work on your CV, no matter how small, will show employers that you have picked up some basic skills such as organisation and time management that are key in any job. Also, working now will prepare you for the professional life ahead, with the added bonus of some extra cash to help you pay for all those holidays and festivals.
“It's something I have enjoyed doing throughout my time at university, and it allows me to meet a much broader circle of people than I would purely by attending lectures or the like-minded friends I have made through societies,” says Nat. “It also teaches you to balance multiple responsibilities, and gives you many interesting stories to tell and learn from.”
Most universities have a dedicated job service to help students find employment during term time. “Leeds University have a ‘Joblink’ employment service here, which can help you with finding a job or temp work,” says Jess.
Meanwhile, the University of Exeter has a service through the CareersZone to help students to find part-time work. “The University employs many students within the various on-campus services and facilities,” explains Emma.
In addition, the University of Warwick offers a Unitemps service. “Unitemps is the University of Warwick’s own temporary staffing service, providing opportunities on campus and in local commercial businesses for students, recent graduates and the wider community,” says Peter. “This gives our students the opportunity to take part in part-time work with the University or local employers earning them money and often useful work experience.”
Mariah Loukou, who studied for her BSc in International Politics, started working for Unitemps during the final year of her studies. “I actually had my first job through Unitemps!” she says. “Being part of Unitemps not only gave me the opportunity to represent my university in prestigious events such as UCAS Fairs, and the Chancellor’s Dinner, but also gave me the necessary work experience to enter the job market.”
However, it can sometimes be tough to balance paid work with study commitment. “While part-time work can provide additional money, the University of Exeter has guidelines for how many hours a students should spend in paid work so as not to negatively impact on their academic studies,” says Emma.
Ultimately, it seems that being organised is the key. Dani says: “Last year I started keeping a diary, which I’ve never used before in my life! Yet sticking to that rigorously has meant I have been able to divide up my time between work and study, without losing track of the bigger picture.”
Savvy shopper
“When it comes to shopping, I’d say shop cheap!” says Dani. “I’m always on the look-out for what’s on offer and not constantly spoiling myself with luxuries.”
We know it can be hard to choose between a night out and dinner, but remember that if you’re not keeping yourself healthy, your work will suffer – after all, the whole reason you’re at university is to get a good degree! Bulk-buying food that’s on offer and freezing it is an excellent way to make sure you’re always stocked up with food, for example.
When it comes to shopping on the high street, or even going out for a meal, there’s no shortage of student offers available. Your student card will automatically qualify you for discounts on certain items, while an NUS Extra card will give you access to more discounts. There are also plenty of voucher websites you can use to get a good discount.
Besides that, be smart about when and where you buy your clothes; some shops offer student discounts and others, like Primark, are notoriously cheap. When it comes to that fancy dress costume, think beyond the party shop – is it cheaper to buy the raw materials and make something yourself, or even go as a group and all chip in for face paint?
If you’re a home bunny, then remember to book your rail tickets a week or two in advance to avoid paying through the nose, or even try out the Megabus.
While these are just a few hints and tips to get you started, there are endless ways to make your money go further. You can read more about funding your studies in the Whatuni Student Advice section – so get cracking, and good luck!
Keely Lockhart is a business and finance journalist. Follow her on Twitter @keelylockhart
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