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Across the board, the top tip for staying in good financial health is budgeting.
Across the board, the top tip for staying in good financial health is budgeting. Photograph: Annie Collinge
Across the board, the top tip for staying in good financial health is budgeting. Photograph: Annie Collinge

Student finances: the lowdown on loans – and how not to blow the lot

This article is more than 5 years old

University life is a blast – but it doesn’t come cheap. How will you keep the bank from running dry? Seb Murray has some pointers

Amid the clamour for clearing places, students tend to focus on just getting into university, rather than on how to pay for it. A student loan is the most cost-effective method for many, as repayments are a portion of earnings and outstanding debt is written off after 30 years.

UK students coming through clearing apply for loans the same way as other students – through Student Finance England or the equivalent body in their country. But switching courses may affect your application – where you live while studying affects your maintenance loan, for example.

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Clearing is part of the admissions process matching students with unfilled places at UK universities.

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So, it’s essential to update your application, to avoid delays. “Beginning uni without money for food, travel or rent can be frightening,” says Joe Woolway, senior financial support officer at the University of Sheffield.

Yearly tuition fees for UK and EU students studying in England are capped at £9,250. Loans cover the full cost and are paid directly to the university. UK and some EU students also can apply for a maintenance loan for living expenses; this is deposited directly into the student’s bank account.

The amount you get depends on household income; below £25,000 and you are eligible for the maximum loan. If above that threshold, the size of loan is calculated on a sliding scale. Use the government’s online calculator to estimate how much funding you’ll get.

In addition, universities often provide plentiful financial aid. Sheffield awards bursaries of up to £1,500, for example, based partly on household earnings. “Having extra finance helped me through the hard times – when I’d spent too much at the start of semester and been short at the end,” says Rosie Ogunade, a 19-year-old psychology student at the university. Search and apply for such awards on the Scholarship Hub website.

A part-time job can be a nice little earner. Chloe Batten, 20, an English student, was paid by the University of Warwick to help with open days and other events. “They’re one-off jobs, so they don’t get in the way of my exams,” she says. “And they look good on my CV.”

But the top tip for staying in good financial health is budgeting. “Live on the outskirts of town, shop at cheap supermarkets and take a packed lunch to lectures,” says Raquel Marques, 22, a vice-president of Middlesex University students’ union. “You can have the full university experience without breaking the bank – if you’re smart.”

Student loans and repayments

£11,354 The maximum maintenance loan for 2018/19, if you live away from home in London.

£8,700 The maximum if you live away from home but outside the capital.

£7,324 The maximum maintenance loan for students living at home.

£9,963 The maximum maintenance loan for students living and studying abroad for a year as part of a UK course.

9% The amount of interest English or Welsh students beginning courses this year will pay back on any income over £25,000.

£37 The monthly repayment for someone earning £30,000.

3.4% The UK’s Retail Prices Index (RPI). Current students’ loans accrue interest at RPI plus 3%. Graduates earning less than £25,000 pay interest at RPI; those earning more pay more – up to RPI plus 3% for those earning £45,000. Interest is capped at RPI plus 3%.

‘Don’t treat your overdraft as free money’ – how I live on a student budget

Tarik Crooks: ‘I do tutoring in term time. It’s quite well paid and doesn’t take up too much time.’ Photograph: Laura McCluskey, Getty Images

Tarik Crooks is a chemical engineering undergraduate at the University of Manchester.

When I was younger my mum bought everything, so it was a big thing realising how much basic stuff like toilet paper and toothpaste cost.

My parents had a chat with me, as I guess they didn’t want me coming back every other week asking for money. But it’s one thing hearing the facts from your parents, and it’s another having money dropped in your account at the beginning of term. It’s so easy to spend when you don’t have anyone telling you not to buy stuff.

My biggest expenditure is food and going out. I spend between £20 and £30 a week on food. In my first year, I went to Sainsbury’s as that’s where my parents go, but I found it’s better to go to cheaper shops like Aldi and Lidl. They have own-label stuff for a fraction of the price and it knocks at least £5 off my weekly shop.

I try to enjoy things in moderation, so I go out at least once a weekend and do something like the cinema. I joined the uni gym at the start of term and because it was near my birthday I asked my parents if they’d buy it as a birthday present. That saved a bit. And I also got a year bus pass immediately, as it’s a big expenditure.

I do tutoring in maths and all three sciences during term time. It’s quite well paid and flexible and doesn’t take up too much time. I also get summer work so I can go on holiday with friends to Europe. You can get a good deal if you book far enough in advance.

My advice would be don’t treat your overdraft as free money. I know people who have gone out and bought lots of clothes then found themselves £1,500 overdrawn and wondering how it happened.

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