Students

Starting university should be one of the most exciting times of your life. However, many of you may already be worried by tuition fees and other costs and wondering whether you will be able to manage financially, you may even wonder whether you can afford to go to university at all. You need to remember that almost all students finish university with debts but if they are in the form of a student loan they only have to be repaid once your income has risen over a certain level.

As well as that, graduates tend to earn 20-25% more than those without a degree and so in the long term you are likely to be better off by going to university. The purpose of this book is to encourage you to think about the likely costs, explain the most effective ways of managing them and then look at ways of making your money go as far as it can while you’re at university.

We at Credit Action have produced some special student tools to make managing your money even easier. Go to www.creditaction.org.uk/debt-advice/student for more details.

In 2010/11, universities and colleges can charge new fulltime students up to £3,290 a year in tuition fees for degree courses. Some will charge less than this and fees can vary between courses, so check with your college or university to see how much they charge. Full-time undergraduate students can apply for a loan to cover the amount of tuition fees they are charged, and students can choose to take out a Tuition Fee Loan for any amount up to the full amount of tuition fees they are charged.

The loan is not income assessed. The Tuition Fee Loan is paid direct to the students chosen institution by Student Finance England (Student Loans Company), and does not have to be repaid until the student has left their course, and is earning over £15,000 per year.

Help with living costs

All eligible students can also get help towards their living costs, how much depends on the level of their household income. The help is in the form of grants (which don’t have to be paid back) as well as loans (which do).

Maintenance Loan

Eligible, full-time students can apply for a Maintenance Loan to help with living costs.

How much a student gets depends on household income and where the student is studying, but all students are entitled to around 75% of the appropriate amount – the remaining quarter is means tested. The amounts for 2010/11 are:

Students living away from their parents’ home and studying in London - Up to £6,928
Students living away from their parents’ home and studying elsewhere - Up to £4,950
Students living at their parents’ home (London or elsewhere) - Up to £3,838
Students studying abroad for at least one academic term - Up to £5,895

The loan is paid in three instalments, one at the start of each term, directly into the student’s bank account. The first instalment will be released after the student has registered on their course at their university or college and it may take up to five days to reach their account. It’s important therefore for students to make sure they have enough money to tide them over for the first week or so. Like the Tuition Fee Loan, the Maintenance Loan does not have to be repaid until the student has left their course, and is earning over £15,000 per year.

Alongside a Maintenance Loan to help with your living costs, there is also a Maintenance Grant. As this is a grant it does not have to be repaid. In 2010/11 the maximum amount of Maintenance Grant available is £2,906.

Whether you receive the Maintenance Grant is dependent on your household income:

Household income up to £25,000 - Full grant
Household income from £25,001 to £50,020 - Partial grant
Household income over £50,020 - Not entitled to receive the grant

The grant is paid in three instalments, one at the start of each term, directly into the student’s bank account. If you qualify to receive the full or partial amount of the Maintenance Grant, the first £1,292 of the grant is paid in substitution for part of the Maintenance Loan.

Students in receipt of certain benefits and tax credits may be eligible to receive the Special Support Grant instead of the Maintenance Grant.

Note: The thresholds for existing students have also been increased:

Household income up to £25,000 - Full grant
Household income from £25,001 to £50,020 - Partial grant
Household income over £50,020 - Not entitled to receive the grant

NEW FOR 2010 There is now an online Student Finance Calculator to help you calculate what support you might be entitled to. Visit www.direct.gov.uk/studentfinancecalculator

Bursaries

Bursaries are non-repayable extra help. English universities and colleges charging the full £3,290 a year for tuition fees are required to provide additional nonrepayable financial support in the form of a bursary to students who are receiving the full Maintenance Grant.

So, students who receive the full £2,906 Maintenance Grant or Special Support Grant and who are being charged the full £3,290 tuition fee will receive a bursary of at least £329 from their university or college. However, many institutions are offering more than this. Many universities and colleges are also giving bursaries to students eligible for part of the Maintenance Grant or Special Support Grant as well.

Lots of universities are offering considerably more than the minimum. Check the university or college website that you’re interested in and find out what it offers, or to find out more on bursaries see the information on Directgov (bursarymap.direct.gov.uk).

Disabled Students’ Allowances

Disabled Students’ Allowances (DSAs) are grants to help students pay for extra costs incurred when studying their course, as a direct result of their disability, mental-health condition or specific learning difficulty. DSAs are paid on top of the standard student finance package. DSAs are not means tested and are non-repayable.

As with student loans and the Maintenance Grant, Student Finance England pay the money into the student’s account, or directly to the supplier of services (for example the university, college or equipment supplier).

Students can apply for DSAs if they are studying:

• a full-time course that lasts at least one year (including a distance-learning course)
• a part-time course that lasts one year and doesn’t take more than twice as long to complete as an equivalent full-time course (including a distance learning course).

The maximum amounts for DSA in 2010/11 are given below:

Type of allowance	Full Time	Part Time
Specialist equipment	Up to £5,161 for the entire course	Up to £5,161 for the entire course
Non-medical helper	Up to £20,520 a year	Up to £20,520 a year
General Disabled Students’ Allowance	Up to £1,724	Up to £1,293

Help for students with children or adult dependants

Adult Dependants’ Grant

This can provide extra financial help to full-time students with an adult who depends on them financially. The grant is paid on top of the standard student finance package. The grant is non-repayable, and is means tested.

An adult dependant can include a partner (including a same-sex partner), or a member of the student’s family (but not a grown up son or daughter). The maximum amount of grant available in 2010/11 is £2,642 per year.

Childcare Grant

The Childcare Grant is money to help pay for approved childcare costs for full-time students. The grant is means tested and is non-repayable.

The grant is paid on top of the standard student finance package. The maximum amounts available in 2010/11 are:

One child £148.75 a week (85% of actual costs up to £175 a week)
Two or more children £255 a week (85% of actual costs up to £300 a week)

Parents’ Learning Allowance

This allowance is to help pay for course-related costs such as books, materials and travel. The allowance is paid on top of the standard student finance package and is paid in three instalments, one at the start of each term. The allowance is means tested and is non-repayable. The maximum amount in 2010/11 is £1,508 a year.

Access to Learning Fund

If you find yourself in financial difficulty you may be able to get extra help from your university or college’s Access to Learning Fund. To qualify for help you must have applied for all the relevant loans, grants and bursaries.

As the fund is operated by universities and colleges, monies might be paid as a loan or a non-repayable grant, or in a lump sum or in instalments.

Special Support Grant

The Special Support Grant (SSG) replaces the Maintenance Grant for students on benefits, so if you are entitled to receive a Special Support Grant, you will not be able to receive a Maintenance Grant as well.

To be eligible for the SSG students must have an underlying eligibility for a means tested benefit. The amounts are the same as for the Maintenance Grant:

Household income up to £25,000 Full grant
Household income from £25,001 to £50,020 Partial grant
Household income over £50,020 Not entitled to receive the grant

The grant is non-repayable and is means tested. The grant will be paid in three instalments, one at the start of each term, directly into the student’s bank account. There is no substitution for the Maintenance Loan (as with the Maintenance Grant) if the student receives the Special Support Grant. Department of Work and Pensions benefits are not reduced because of this grant.

NEW FOR 2010 The online Student Finance Calculator will help you calculate what support you might be entitled to. You can now save your quote and email it to a personal email address, enabling you to revisit or update it when it suits you. Visit www.direct.gov.uk/studentfinancecalculator

Help is also available for part-time students. There is a grant towards fee costs, and a grant towards course costs, both of which must be applied for at the start of each academic year.

Fee Grant

Part-time students can apply for a Fee Grant to contribute to their tuition fees. The amount of grant available depends on the intensity of the course (how long it takes to complete the part-time course compared to the equivalent full-time course – the university/college can advise on intensity). The grant is means tested and is non-repayable. Tuition fees for part-time courses are not capped and therefore there is no minimum or maximum amount. Individual institutions set their own fees for part-time courses.

Course Grant

Part-time students can apply for a Course Grant to help towards course related costs such as books, materials and travel. The maximum amount of the Course Grant is £265, regardless of the intensity of study. The grant is means tested and is non-repayable. Maximum rates for 2010/11:

	50-59% of full-time intensity	60-74% of full-time intensity	75% or more of full-time intensity
Maximum Fee Grant	£825	£985	£1,230
Maximum Course Grant	£265	£265	£265
Total maximum	£1,090	£1,250	£1,495

Students should apply for student finance as soon as possible. When applying, you may be asked to provide evidence to support your application. Your parent or partner may also have to supply information and evidence of your total household income. Students only need to make one application for the main types of help.

Students are encouraged to apply online at www.direct.gov.uk/studentfinance. However, by visiting the Directgov website you can also download the application form and submit your application for support by post. Universities and colleges may have different arrangements for bursaries and other financial support. Please check with your university or college.

For students applying for support for the first time, to guarantee receiving support by the time your course begins, students must apply by 25 June 2010 if they are applying for means tested support, and by 21 May 2010 for the non means tested element. You can still apply after this date but Student Finance England cannot guarantee that you will receive financial support by the time your course begins.

Once a student’s application is received it will be checked to make sure that all the information required has been supplied. The application will then be assessed to make sure that:

• the student is eligible to receive student finance; and, if they are,
• how much they are entitled to receive.

They will then be sent a financial notification letter showing the student finance they are entitled to receive within six weeks of the application being received. Before the start of their course, students will be sent a payment schedule letter showing the amount of the instalments and when they are likely to be paid.

It’s important that students keep this letter, as they may need to take it to their university or college when they enrol. Once a student has registered on their course and the university or college confirms their attendance, the first instalment of Maintenance Loan and any grants are made by electronic payment, usually within five days.

The Maintenance Loan and Grant are paid in three instalments – one at the start of each term. If you have applied for a Tuition Fee Loan, this is paid directly to your university or college on your behalf. Your university or college will pay any bursary or scholarship entitlement to you.

Repaying student loans

Students do not start to repay their loans until they have left their course and are earning over £15,000 a year.

If earnings fall below £15,000 then repayments stop, and will only start again once earnings rise over £15,000 again. Repayments are linked to how much is earned, not the amount borrowed. Repayments are based on 9% of earnings above the £15,000 threshold, so someone earning £18,000 would pay back £5.19 a week. Interest rates on the loan are linked to the rate of inflation, so what is repaid is the same in real terms as the amount borrowed. Interest will begin to be applied to your loan from the day that you receive your first loan instalment.

The length of time you take to repay your loan (the ‘repayment period’) will depend on your income after you leave college and the total amount you have borrowed. If you started your studies in 2006 or later, the Government will write off any part of your student loans left unpaid 25 years after you leave your course (exclusive of outstanding arrears).

All students starting a higher education course in 2010/11 or later, taking out their first student loan and having a repayment start date of April 2012 or later will be entitled to a ‘Repayment Holiday’, provided they are on their course on 6 April 2011, that they complete it and are due to enter repayment for the first time in, or after, April 2012.

This means that they will be offered the choice of putting their student loan repayments on hold for up to two years. The full two years do not have to be taken consecutively. Interest will continue to be applied to outstanding loans during a Repayment Holiday. Any time taken as a Repayment Holiday will extend the usual 25 year repayment period by the length of the break taken.

For more information about repayment go to www.studentloanrepayment.co.uk

Students from Northern Ireland

If a student normally lives in Northern Ireland, and is studying anywhere in the UK, they can apply for support online at www.studentfinanceni.co.uk. Hard copies are also available through this site, and from the students’ Education & Library Board (ELB). For more information on the student finance arrangements and how to apply, visit www.studentfinanceni.co.uk or contact your ELB.

Students from Scotland

If a student normally lives in Scotland, and is studying anywhere in the UK, their application will be dealt with by the Student Awards Agency for Scotland (SAAS). For more information on the student finance arrangements and how to apply, visit www.saas.gov.uk

Students from Wales

If a student normally lives in Wales, and is studying anywhere in the UK, they can apply for finance through Student Finance Wales. For more information on the student finance arrangements and how to apply, visit www.studentfinancewales.co.uk

Unless you are living at home the biggest cost will be accommodation. This will depend on whether you are in a Hall of Residence, private rented accommodation or perhaps lodging. Sometimes it is hard to rent privately for just term time and you will need to bear this in mind if you have to rent for the full year. It is important to work out how much you think it will cost you every year to live as a student.

The NUS produce a table of figures which you might find a helpful guide to the average cost of studying in London or elsewhere. Visit www.nus.org.uk to check their latest figures.

Your university or college may also be able to give you some guidance if you contact the students’ union. What it means for you As you will see from the NUS website, even if you do not have an active social life, it will still cost you a considerable amount to live. You need to think about how you can finance some of these costs to minimise the amount of debt you will graduate with. Can you take a summer job or a part-time job at university? Are you eligible for a grant, bursary or other benefits? How else might your parents or family be able to help you? Will they give you a regular, monthly contribution? How will you keep track of the money you receive to make sure that it is meeting your needs? How can you use your money wisely to ensure you have enough? What will you do if you get into real financial difficulty? Phew, what a lot of questions!

Fortunately, this book provides plenty of places where you can turn. Try to talk to your family at the first sign of any difficulties and not when you have got into such a mess that you might be thinking of giving up. Full-time students are not entitled to Jobseeker’s Allowance, Income Support or Housing Benefit, unless they abandon or are dismissed from their course.

This applies to vacations as well. However, there are some exempt groups of students who can claim the following:

Income Support

As a full-time student you cannot claim unless you are:

• a single parent
• a disabled student who qualifies for the Disability or Severe Disability premium.

Housing Benefit

Most full-time students are not entitled to Housing Benefit. However, you can claim if you are a single parent or disabled student. In addition Housing Benefit can be claimed by a person who is part of a couple, both of whom are students, with a dependent child or children. For means tested benefits only certain elements of the funding received by students will be counted as income.

Currently, the Tuition Fee Loan and the Special Support Grant are not counted as income, however the Maintenance Loan and Maintenance Grant are considered as income. For more information about students and the benefits system you should contact your local Jobcentre Plus. Part-time students may be able to claim benefits if they are on a low income.

Council Tax

Council Tax is a tax on the household, not individuals. If a full-time student lives in college accommodation, in a house by themselves or in a house where all the occupants are full-time students, the household will not be charged Council Tax. However, normally you will still have to fill in the Council Tax forms so make sure you do this accurately and on time otherwise you may be charged.

You will also need to contact your university or college to obtain proof of your student status to show to your local council. If a full-time student lives with one other adult who is not a student, that household is eligible to receive a 25% discount on their Council Tax bill if the student can prove their student status.

If a full-time student lives with a number of adults who are not students, the household will not be eligible for a discount on their bill. Different rules apply for part-time students. They will not be eligible for the student discount but might be entitled to Council Tax Benefit if they are on a low income.

If in doubt, contact your local council to explain your situation and ask about eligibility. For further information visit www.direct.gov.uk

Opening a bank account

It is a good idea to shop around the high-street banks for a bank account. Don’t just join for the incentives (although do look out for good offers!) as some banks may be more student friendly than others. For example, check what their graduate account is like. You don’t want to have to clear your overdraft the minute you graduate. Most banks will offer a few years’ grace. You can compare the features of different accounts at internet comparison sites such as www.moneysupermarket.com

To open a student account you need to fill in an application form from the bank or building society of your choice. Then you will need to take it, with some proof of your student status, to your nearest branch. If you are opening an account for the first time with a particular bank you will need to provide proof of identity and address – your passport and/or driving licence should be ideal. You may also be able to apply online for an account. It is a good idea to try and open your account before you arrive at university. Sometimes cheque books and cash cards cannot be issued at weekends and in any case usually take a number of days to come through.

Cheque books and cards also occasionally go astray so it is sensible to take cash with you for the first few days. Also some banks will not send cheque books to colleges for security reasons and therefore it makes sense to open your account in advance so that your cheque book can be sent to your home.

Who can apply?

Student accounts are only available to full-time students who are over the age of 18. This is because legally you can only take on your own credit commitments when you are over 18.

You must be studying for a degree or equivalent qualification at a university; college of further education; teacher training, nursing or agricultural college. You will need to supply evidence of your student status. These accounts are not available to people who are still at school or studying for ‘A’ levels or equivalent.

The benefits

Interest-free overdrafts – many banks and building societies recognise that money is in short supply for a large number of students. That is why most provide interest-free overdrafts up to a certain amount. This figure tends to rise each year as you progress through your studies. Students will usually only be able to take advantage of such accounts if they are on a recognised full-time course.

‘Free’ banking – most banks and building societies will waive the normal charges for standing orders and direct debits. Furthermore you should be paid interest when your account stays in credit although this is likely to be at a very low rate.

Debit cards – you will almost certainly be offered a Maestro (or Visa Delta) card when you open an account. These are debit cards which, when used in shops displaying their logos, will ensure that your current account is debited a day or two after making your purchases. It means that you can spend what you have in your account or within the limits of an agreed overdraft arrangement. Debit cards also enable you to obtain cash from cash machines. Remember to use cash machines wisely, only taking out what you really need, if you take out more you’re only likely to spend it!

Credit cards – (e.g. Mastercard, Visa and Barclaycard) can be very handy – particularly for buying online or travelling abroad – but also very seductive to the hard up student. If you do use one, be sure that you can pay the credit card bill off in full each month or be sure that you can repay the debt from definite income you are to receive in the not too distant future. It is so easy to run up a significant debt with your credit card...and then be unable to repay it, so be very careful. It can be useful to use a credit card for some purchases while you are at university to help build up a good credit rating, but only do this when you know you will be able to pay the full bill off.

Also make sure you are aware that using your credit card for things other than regular purchases can be very expensive. For example using a credit card to withdraw money from an ATM is treated as a ‘cash advance’ which incurs interest charges immediately at up to 30% APR! Make sure you understand the way any credit product you use works thoroughly.

Travel facilities – banks recognise that many of you will want to travel abroad during vacations and you may well be able to obtain commission-free foreign currency and/or travellers cheques.

Insurance – many banks and building societies offer personal insurance. These policies usually cover clothes, books, stereos etc. For a small extra premium you can usually add your bike as well. Before taking out a policy check that you are not already covered by your parents’ home contents insurance. Personal Accident Insurance may also be included and will cover your time at home as well as at college. It is also a good idea to shop around. You don’t have to take your bank’s insurance!

Online banking – having a bank account which you can manage online can be extremely useful. Firstly it allows you to set up direct debits on bills and other commitments so that they are paid automatically (so you can’t forget!) and it also allows you, at the click of a button, to see where you are up to with your money. This makes managing it that little bit easier.

Additional borrowing – it is vital that if you feel your financial needs are going to be higher than the interest-free overdraft you have been given, that you contact your branch and reach agreement on a figure that you can borrow. Special low rates of interest could well be on offer to you. In any case get in touch. There is every reason to feel confident about your application. Bank managers see students as having very good potential so be bold! Below is an example of the type of letter you could write to your bank manager:

Date Your address
Bank Manager’s name and address

Dear Mr/Mrs....
Re: (your account number)

As you know I am a student at ................ Although I have been budgeting (and
making full use of your free overdraft facility) I am struggling to make ends meet.
I wonder if we could arrange a meeting to discuss my financial requirements?

Thank you for your attention.
Yours sincerely (Signed)

Remember too that if you go overdrawn without authorisation the interest rate you are charged will rise steeply.

Other incentives – depending on what takes your fancy these range from cash through to CDs and pizzas! Also when choosing your free gift, think about the long term use of it. A fifty pounds cash incentive may sound good but it soon goes, so go for something that will benefit you over the long term. Interest and taxation If your total annual income, including interest, but excluding your student loan is less than your personal tax allowance you can have your interest paid to you gross, i.e. without income tax being taken off.

If this applies to you, and it will for most students, you need to fill in an R85 form for each of your accounts. It’s worth asking your bank or building society if you can register to receive tax free interest over the phone. If not the HMRC (formerly Inland Revenue) has a helpline on 0845 980 0645.

Help with budgeting

Every month, you should get a bank statement detailing all your transactions. This will include any interest or charges relating to your account and give you an up-to-date balance. Statements are normally issued automatically to you each month, but extra copies can be obtained by calling in, or phoning your branch (you may be charged a fee for this service), or using a cash machine that is linked to your bank or building society. However, an excellent way to keep up to date is to register for online banking by visiting your bank’s website.

Remember to dispose of old bank statements and other financial documents carefully by shredding them or cutting them up thoroughly. You don’t want your fun at university being spoilt by identity theft! Budgeting is the art of keeping your spending under control – but this is not necessarily as simple as it sounds! However, the time you spend planning your budget for the coming year will be time well spent. As a budget has to be accurate to be effective you need to keep track of everything you spend.

Therefore, it is important to monitor your spending even when you buy everyday things at the supermarket, the pub or the kebab shop.

These small items soon add up – and it is likely that you will spend more on them than you think. One very easy way to budget as you go today is by using the all new Credit Action ‘Spendometer’. You can download this for free from www.creditaction.org.uk/ downloads/spendometer, allowing you to budget easily with your mobile phone.

In conjunction with this you need to try and record accurately what you have spent using cheques (writing on stubs makes this easy) together with debit and credit cards (your bank does the work for you with your statements!). You should then have a clear picture of your spending.

Why budget?

Budgeting may seem dull, but there are several really good reasons to budget:

1. It gives you an accurate picture of your financial situation.
2. It could well enable you to reduce your spending as you identify certain areas where you are spending too much, and thus improve your overall position.
3. It will show you (and your parents and bank manager!) that you are handling your money wisely.
4. It prevents you running up substantial debt on which you will have to pay interest and which you will have to repay! Be absolutely honest There is no point budgeting if, for example, you put down nothing for coffees, text messages or magazines!

Keep track using the ‘Spendometer’ as you go along. Look at your priorities When you have first produced your budget, look at what you are spending your money on. Does it accurately reflect your priorities?

Accommodation will be your largest expenditure. If you are in halls of residence be sure to pay the residential fees at the beginning of the term. If you are in outside rented accommodation you could set up a standing order to pay the rent monthly.

However, do ensure that there is sufficient money in your account each month – banks don’t like it when you go overdrawn without arranging it beforehand or exceed an agreed overdraft limit! Because of the extra work involved in having to ‘bounce’ a cheque or stop payment of a standing order they will make additional charges to your account.

Your individual priorities may vary, but it is essential you have food and drink, accommodation, warmth, and light. Therefore ensure you always set aside enough to pay for:

• basic foodstuffs
• rent
• gas/electricity

If you are house-sharing, you will need to come to an arrangement with your house mates about how to pay for bills and food. For example, you might all agree to pay into a shared pot for food, rent and gas and electricity or all shop separately but share the cost of bills and essentials like milk and bread. Different people work differently but communication is key to reaching an agreement that suits you all. It is vital to establish practical priorities in your spending.

Pay by instalments Utility charges mount up and your quarterly bills can be much higher than you probably anticipate. For these regular bills it might be easier to spread your payments over the year paying by direct debit monthly – but again, do ensure that you keep enough money in your account to meet these debits as they arrive each month.

The gas or electricity company may even offer you a discount for paying by direct debit! The more you can organise bills to come on a monthly basis the less likely you’ll be facing an unexpected or forgotten bill appearing suddenly. Spreading payments over time will also help you budget. If you are struggling to pay for any items you must get in touch with whoever you owe money to straightaway.

Do not be afraid of seeking help from your union representative or welfare officer at college.

Keep your spending disciplined

Use your budget to guide your spending. Stick to the shopping lists you produce, set yourself limits on the ‘Spendometer’, and try to minimise ‘impulse’ spending. If you struggle with this it often helps to watch fewer adverts on TV, read fewer magazines or go to the shops less often.

Review your budget

When you have first finished your budget, review it carefully. Go over it again:

Are you sure there is nothing missing?

Do you want to alter your spending habits in any way?

Have you got your priorities right?

Take it seriously

Managing our money isn’t an exciting thing to think about and yet it’s absolutely crucial to learn to do it well, not just for when you’re a student, but for our lives in general. When money is tight, as it will be while you are at university, you need to learn how to make your limited resources go a long way.

Spread income

You should try to spread your income over the whole period to which it relates. If you receive your loan cheque at the beginning of a term, remember that it has to last the whole term! Don’t be tempted to spend it all at once – expenses will keep on coming!

Spend sensibly

This is essential – remember that money for tomorrow’s needs is more important than today’s wants.

Sometimes this will mean going without things you’d like to have, like that third pint, the new DVD, that frothy latte or the nightly kebab on the way home from the pub, but in the long run cutting these things out could save you a lot of difficulties. Try to take advantage of student offers such as those available with your NUS card or from www.studentbeans.com.

Work out your spending

When calculating your budget you need to work out your income (the amount of money you have coming in) and expenditure (the amount of money you have going out) on a regular basis – monthly is ideal. For example, if you get a cheque for £600 which is supposed to last you three months, allocate £200 for each of those months as your income. Similarly, if you have a quarterly phone bill of £60 allocate £20 to each month’s expenditure. Standing orders and direct debits are a helpful way of doing this.

Analysing your budget

Once you have completed your budget and added up the totals, how does it look? Hopefully, you will be in a position of showing a surplus (some money left over) however small. If you have less money than you need, according to your budget, this is called a deficit. If this is the case, don’t panic! There are things that you can do to improve your position.

Ways of improving your budget position

• Try to trim your spending in non-essential areas. For example, you can do this by avoiding situations where you know you’re more likely to spend, like window shopping, and by being disciplined in writing up shopping lists and sticking to them instead of just seeing what you fancy when you get to the supermarket.
• See if you can get a holiday job to boost your income. Contact a local employment agency, look out for signs in local shops and businesses, or search the internet. If getting a job is viable, try to apply as early as possible and ideally aim to earn enough to repay any debts you may have accumulated during the academic year. By doing so you will be starting a new academic year debt free (except for your student loan of course!). This is a great thing to aim for.
• Try to cut out paying excess interest. You can do this by:
  (a) taking advantage of the free overdraft and other facilities offered by your bank or building society.
  (b) ensuring that if you have done this already you are borrowing as cheaply as you can. This will almost certainly mean continuing to borrow from your bank or building society within agreed limits. The advantages of this can be seen in the table below. It shows the approximate Annual Percentage Rate (APR*) of interest that you would be charged to borrow from various organisations.

Borrowing Table
Lender	Typical rates of interest
1. Banks/Building Societies (a) special student packages with agreed initial borrowing limit (b) any increase over agreed limit negotiated with your bank (c) any unauthorised borrowing – Beware!	Nil 5% – 8% 20% – 30%
2. Finance Houses	11% – 16%
3. Credit Cards	10% – 20%
4. Credit Unions	10% – 27%
5. Store Cards	15% – 30%
6. Licensed ‘non-standard’ Lenders	50% – 200%
7. Illegal Money Lenders (loan sharks) AVOID!	Whatever they can get away with

* APR – whenever you are using credit it is vital that you compare these rates as well as the ‘cash’ price. A high APR can make goods cost much more than you would imagine. Use one of the calculators on www.moneybasics.co.uk to help you.

Personal budget

It is a great idea to keep a running budget. One popular way to do this is to use a spreadsheet. Visit the student section of the Credit Action website to download an Excel Student Budget Sheet. Try to keep your budget up to date by spending a few minutes once a month going through it.

That way you’ll always be informed and in control of your financial situation – it should take no more than half an hour – pretty much painless!

Acknowledge emotions

If you spend too freely early on, or if you just simply do not have enough income to survive, you can find yourself getting into problem debt. This can cause worry and stress which could easily distract you from your studies. In fact a few years ago an NUS survey showed that 1 in 5 students considered giving up their course at one time or another, because of the strain of financial worries.

This is why it is so important to keep a check on your finances with accurate budgeting, and also to communicate with your bank immediately if things start to go wrong. Whatever you do, don’t panic and think ‘I got myself into this mess, it’s up to me to get myself out’. All banks will have understanding and sympathetic personnel who will be able to offer reassurance as well as solid financial help.

Communicate

It is important to be as open as possible about your personal financial position. Therefore it is necessary to communicate with:

Yourself (!)

It is easy to put your head in the sand and pretend that there isn’t a problem. The quicker you face up to your difficulties the quicker they will be resolved.

Your family

If you are struggling, or there are things you don’t understand, it’s best to talk with your family if you can. They probably would like confirmation that you are coping away from home and will be reassured to learn that you are facing up to your financial responsibilities.

Student Finance England

If your own or your parents’/spouse’s financial position changes significantly during the course of the year, you should let Student Finance England know immediately.

Your bank or building society

As mentioned earlier, it is sensible to contact your bank immediately when you begin to struggle so that problems can be resolved.

Whatever you do, do not ignore any letters/emails/phone calls from your bank and go overdrawn without authorisation. This will only push up your interest charges sharply and turn what would have been an easily soluble problem into something much more difficult to resolve and more stressful.

Your creditors

If you owe money to anyone else and your circumstances change, contact them immediately. People cannot be sympathetic to your cause if you don’t tell them what the problem is. The more reliable you are in communicating with your creditors the more willing they are likely to be in trying to help.

Creditors will not just go away. By not keeping them informed and ignoring their letters, you will only make them more irate and far less likely to compromise with you or make an effort to understand your situation. If you fall into arrears, they will share this fact with other lenders through a credit reference agency.

You want to protect your credit history by avoiding defaulting on a loan (not repaying it) otherwise you would probably be refused credit for the following six years. If you ignore your creditors, you could end up in court; and you will certainly end up in a mess. By telling creditors straightaway when difficulties occur, they can see that you are:

• being honest
• wanting to tackle your problems
• trying to plan ahead as best you can.

Remember when trying to negotiate with creditors always enclose a copy of your financial statement which is a written budget form showing a breakdown of your income and expenditure. An example of the sort of letter you could write is as follows:

Date

Your address

Creditor’s name and address

Dear Sir/Madam

Re: (your account number)

I am writing to you because I am beginning to struggle to manage my finances. I am currently a student at ............ and my course finishes in (enter date). As you can see from my enclosed financial statement, at the moment I can only afford to pay you ................ per month. Would this payment be agreeable to you until I finish my course and gain full-time employment at which time I will obviously pay the balance as quickly as I can?

Thank you for your attention

Yours faithfully (Signed)

Your friends

At all universities and colleges there will be some people who have more money than others. This is inevitable. Try to ration your spending so that you at least have a little left over for socialising. This, after all, is a key part of student life. However, it is not normally advisable to borrow money for more than the odd drink. This puts pressure on friendships and can lead to guilt and more worry for you.

Your student union welfare officer/student advice centre

With the vast majority of full-time students now having to take out loans, any problems that you are facing will not be new to them. All welfare officers should be able to give sound and reassuring advice.

Advice agencies

If, however, you would like free, independent and confidential advice you can either ring the Consumer Credit Counselling Service (0800 138 1111) or go online at www.cccs.co.uk/debtremedy. Or you can visit your local Citizens Advice Bureau. Both of these charities will be able to supply you with self-help material as well as giving you sound advice.

 

Food shopping

Food is an essential part of your budget and is likely to be the most flexible part of it. As a result, when you’re overspending it is usually the food budget that you cut first. But this is not something that is simply done!

You must make sure that you have a healthy, balanced diet. The following ideas should help:

• Plan your menu a week ahead and buy foods accordingly.
• Where possible, combine your shopping with a housemate, buying to cook for two is usually cheaper than cooking for one.
• Remember packed lunches work out much cheaper than buying sandwiches or eating out.
• Always use a shopping list with items for your planned menu – and stick to it! Of course, you can treat yourself from time to time, but most of the time you need to stick to a list.
• When you get to the supermarket, immediately check out the ‘reduced item’ shelves (usually at the end of an aisle) to see if there is anything you could use.
• Keep a running total as you shop and check against the till receipt – mistakes do occur!
• Watch the ‘sell by’ dates as you shop. You do not want to throw away food which you bought cheaply but cannot use in time. In the UK we throw away a third of all the food we buy. This is both costly and a ridiculous waste.
• Take advantage of discounts for buying in bulk – but only when you are sure you will be able to use the items. There is no point buying ‘3 for the price of 2’ if the product will be out of date before you can use it. Tinned goods, cereal, toiletries and frozen goods (as long as you can store them!) are ideal things to buy in bulk.
• Prices of many fresh products such as fruit and vegetables vary during the year so include items when they are cheap and avoid them when they are not.
• Buying fresh vegetables from the local market or greengrocer usually works out cheaper than buying them from the supermarket.
• Fresh fruit and vegetables that need washing and cutting are much cheaper than prepared or frozen items.
• Avoid prepared ‘instant meals’ as you are paying for someone else to prepare them.
• Buy ‘own brand’ products which are often cheaper but just as good.
• Take advantage of all the money-off coupons you can. If you usually shop at one regular supermarket take advantage of any ‘reward card’ they provide which turn ‘points’ into cash vouchers.
• Visit supermarkets at the end of the day, when fresh food is often marked down in price.

Other ideas

Below are just a few more ideas that can help your money go further. They may not work for everyone but why not think about them.

• Only pay with cash. This is easier said than done, but if you can’t afford something, save for it. Paying in cash also helps you keep a better track of what you’re spending.
• When you are thinking of buying something, ask yourself whether it is something you need or just want. Try waiting a few days before you buy anything (particularly for expensive items) – that should test how much you need it.
• As a general rule, don’t buy what you don’t need.
• Shop around for the best price. If you are thinking of using credit, remember to compare the APR as well as the prices.
• Don’t be afraid to haggle (negotiating for a discount) – especially if you are paying cash.
• Don’t feel under pressure to buy something once you’re in the shop – it’s always your right to walk away!
• Buy things that are good quality but don’t pay over the odds just for a label.
• Remember that restaurants and fast-food places are expensive compared to eating in.
• Take bottled tap water or squash with you if you are playing sport or attending lectures. Buying drinks when you are out and about can quickly become costly.
• When you use a washing machine, oven and so on, try and fill them to save energy costs. Additionally, turn appliances off when not in use instead of leaving them on standby. A TV on standby uses 90% of the energy needed to run it.
• Shop in sales wherever possible.
• Can you make gifts for people? By taking a bit of time you might be able to make something nice and save a lot of money. For example, could you knit a funky, chunky scarf rather than buying one?
• Keep your budget up to date.
• Keep looking for ways of making the most of your income and cutting down on your spending.
• Keep a record of what you spend and check this against your bank statement.
• Keep receipts and guarantees in case things go wrong.
• Talk to your friends and family – often people have quite inventive ways of saving the pennies.
• Have your NUS card handy since it gives benefits on many things.
• Websites like www.studentbeans.com and www.moneysavingexpert.com have great money saving ideas and offers for students.
• The ISIC card (International Students’ Card) can often get you money off flights and other travel and can be used to obtain student discounts abroad.
• The Young Person’s Railcard is very useful since you can get substantial discounts on tickets and the initial cost of the card can usually be recovered after only one or two trips.
• Return library books and rented videos and DVDs on time to avoid fines which can mount up quickly. Your library may be able to loan you videos and DVDs which will usually work out cheaper than borrowing from a video/DVD rental store.
• There is usually a thriving market in secondhand course books from other students. Amazon.com has a section for buying and selling used books.

Student Jobs

Most students have jobs, some during term and some only during vacations. There are different tax arrangements for each, which are explained below. As a general rule, if the amount you earn during a tax year is less than the personal allowance*, you should not pay any tax. If you do, you can claim it back.

Students who earn over £105 per week will pay national insurance.

Vacation jobs. If you’re a full-time student working only during the vacations, will be returning to study at the end of the vacation, and you think you will earn less than your personal allowance, you should tell your employer and ask for the form P38(S). When you’ve filled in your part of the form, return it to your employer who should complete it and send it to the tax office. Your employer should then pay you without deducting any tax. If you think you will earn more than your personal allowance, you should pay tax in the normal way.

Term-time jobs. If you work during term, you will have to pay tax in the same way as people not at university, even if you think your total earnings for the year will not be more than the personal allowance. The HMRC (formerly the Inland Revenue) will, however, send you a form P91 which you should fill in and return so that the HMRC can check that your employer is deducting your tax correctly.

If you pay tax and it later turns out you didn’t need to because in the end you didn’t earn more than the personal allowance you can claim back the tax by applying to your local tax office (your employer should have the address). The student section of the HMRC website includes a calculator to work out the amount you can expect to receive back.

The HMRC website www.direct.gov.uk and the leaflet Collection of Student Loans (E17) have the latest information.

* Everyone is allowed to earn a certain amount before they pay tax and this is the personal allowance. In 2009/10 it is set at £6,475.

 

Citizens Advice
Details of local offices and their telephone numbers are provided on the website.
www.citizensadvice.org.uk

Consumer Credit Counselling Service
Tel: 0800 138 1111
www.cccs.co.uk

Credit Action
6th Floor, Lynton House, 7-12 Tavistock Square, London WC1H 9LT
Tel: 0207 380 3390
www.creditaction.org.uk
www.moneybasics.co.uk
Remember you can download the Spendometer for free at www.creditaction.org.uk/tools/spendometer

Directgov
Provides easy-to-understand information on where government services and legislation impact on university life including housing, funding and tax. www.direct.gov.uk/uni

Educational Grants Advisory Service
c/o Family Welfare Association 501-505 Kingsland Road, London E8 4AU
Student Advice Line Tel: 020 7241 7459 (available Tuesday, Wednesday and Thursday 2-4pm) www.direct.gov.uk/en/Dl1/Directories/DG_10011032

Student Awards Agency for Scotland
Tel: 0845 111 1711
www.saas.gov.uk

Student Finance England
Tel: 0845 300 5090
www.direct.gov.uk/studentfinance

Student Finance Northern Ireland
Tel: 0845 600 0662
www.studentfinanceni.co.uk

Student Finance Wales
Tel: 0845 602 8845
www.studentfinancewales.co.uk

Student Loans Company Limited
100 Bothwell Street, Glasgow G2 7JD
Tel: 0845 026 2019
www.slc.co.uk

National Union of Students
2nd Floor, Centro 3, Mandela Street, London NW1 0DU
Tel: 0207 380 6600
www.nus.org.uk

Student Beans – Discounts for students
www.studentbeans.com

UniAid
Tel: 0207 785 3885
www.uniaid.org.uk

Do…

• Ensure you know how the Student Loan system works.
• Try to have some savings in case your loan cheque is delayed.
• Budget! Use the Spendometer to help you.
• Keep a record of what and where you spend.
• Have a list of priority spending – differentiating between needs and wants.
• Pay tuition fees.
• Take advantage of your bank’s free banking facilities.
• If they require a response then reply quickly to letters from your bank, building society or any creditors and keep a copy of all correspondence.
• Be aware that if things go wrong financially, it can affect you emotionally and seriously distract you from your studies. Seek advice speedily. The longer you leave a problem the harder it will be to sort it out. Talk to family, student welfare officers, bank staff etc.
• Allow some money for recreation and pleasure.

Don’t…

• Overspend at the beginning of your first term. Remember your money has to see you through the year. Spend more than you can afford when going out. Leave your cash card at home!
• Buy non-essentials when struggling to pay for essentials.
• Ignore signs that spending is getting out of control.
• Guess at what you are spending.
• Be afraid to talk to someone and seek advice if you are having problems financially.
• Cut yourself off from family and friends if things get tough.
• Make rash promises to pay when you know that you can’t.
• Exceed your overdraft limit without previous authorisation. Unauthorised overdraft rates are very high when compared with what is offered if you stick within agreed limits.
• Get paranoid! Remember even if you are struggling, your bank or building society will see you as a good long-term investment, so approach them with confidence.

Conclusion

We very much hope that this booklet will help you handle your money sensibly and enable you to find ways of making your money go further. Do not hesitate to get in touch with Credit Action or our sister charity the Consumer Credit Counselling Service (CCCS) if the need arises.

You can phone the free CCCS helpline on 0800 138 1111 or contact Credit Action on 0207 380 3390. Whatever your financial circumstances – rolling in cash or desperately stuffing your hand down the back of the sofa – keep in touch with your bank or building society. Don’t forget, many of the banks’ staff were once college students, others may well have children at university and they know only too well the problems you are facing. You will be surprised at just how helpful they can be.

Everyone at Credit Action and the Consumer Credit Counselling Service wishes you an enjoyable, successful and worry-free time as a student.