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There's a good reason why the phrase poor student exists. Education is not cheap. But by following some basic guidelines year-to-year you can avoid crushing debt that will haunt you all your life.
Secondary School
Even if it is only a modest amount, put away whatever money you can for university while you're still at school, because when you are eating beans directly from the tin in an unheated student flat every penny counts. Don't rely on your parents to do this.
Sixth Form
The Student Loan Company lend money to UK students. You can take out a tuition fee loan, paid directly to your college or University, and if you are a full time student, a maintenance loan to help with living costs and academic expenses.
A student loan might be the cheapest source of borrowing you'll ever get because the rate of interest is meant to match the rate of inflation. In effect it means you're not paying an interest rate which you would be charged if you went to a commercial lender. It makes sense to take out a student loan even if you've been quite good at budgeting, as you should be able to earn as much interest on your savings as you'll eventually be paying to the Student Loans Company, and having an emergency cash reserve is a good idea.
First Year
As soon as you have your matriculation card, you should set up a student bank account; this is one of the easiest methods of saving money. Most banks and building societies offer current accounts specifically aimed at students, with rates and terms that are on your side. The biggest thing to look out for is which account offers you the longest 0% overdraft facility. It is likely that your account will often be in the red, so it's important that as much of your borrowing as possible is interest free. But remember, the bank is watching how much you spend and so should you. Don't go over your overdraft limit!
Use of your Student Loan facilities first even though banks provide free overdrafts. Firstly, by the time you get round to repaying any overdraft you might not be doing so on an interest free basis; secondly if you stray over the free limit you'll pay normal overdraft rates; and thirdly what's available by way of an overdraft is largely at the bank's discretion, so treat any amount the banks advertise as a maximum, not an entitlement.
Second Year
There's lots of small money saving tips that, while only saving a little at a time, will make a difference overall.
- Get your groceries at cheap stores like Aldi or Lidl
- Make yourself a packed lunch instead of buying food on campus
- Look for cinemas or hairdressers that offer deals for students
- If you're a drinker, think about which pubs you go to and the price of the drinks you're ordering; many pubs have cheap student nights or student discounts.
- Spend some time hunting for decent clothes in charity shops or discount stores like Primark or TKMaxx
- Book your journey home as far in advance as you can to take advantage of early booking discounts.
Third Year
Other forms of credit will be relatively expensive, and credit cards should only be used as a short term way of controlling your cash flow. Only borrow what you can afford to repay when your bill comes in.
Always watch your budget carefully. Use internet banking and personal finance software to watch what you spend. Set yourself a budget and stick to it. If you're struggling with cash flow, there are resources at your disposable with more suggestions and guidelines on the information superhighway. We've mentioned before helpful websites run by UCAS and the Government.
Post Graduate
Whether you're returning to Uni for further study or entering the workplace, you're not out of the woods yet. You will be eligible to start repaying your loan the first April after you leave or graduate, and the repayment will be deducted directly from your income. You will be charged 9% (before tax) of anything you earn over £15,795. If you earn less than this you don't have to make repayments yet.
