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 more than 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.

You will have to allow for tuition fees (including what you may know as top-up fees) and course expenses such as books, as well as living costs such as food, accommodation, travel and leisure.

Tuition Fees As a higher education student in England and Wales you will have to pay for your course in the form of fees and it is now your responsibility to pay these fees although you only have to do so once you have completed your study and have a sufficient level of income. You are entitled to help with these fees through a student loan if you have been resident in the UK for at least three years before starting your course.

If you have taken another higher education course before you will need to contact your local authority to see if you are eligible for funding. The Government subsidises the cost of your course through direct payments to the university for each student who enrols with them.

In addition universities in the UK are allowed to charge students a further contribution towards the cost.

This is what you may know as ‘top-up fees’.

Currently universities are allowed to charge up to £3,070 a year which is expected to rise to £3,145 in 2008/09 academic year. The fees charged may well vary between courses as well as universities so make sure you know the cost of the courses you want to do at the universities you want to attend.

This also refers to you if you are undertaking a higher education course at a college rather than a university. You will be able to apply for a student loan to cover the amount that your university or college will charge you.

However you will not need to pay this loan back while studying: you will repay the loan once you have graduated and your earnings have reached a certain threshold.

This threshold is currently set at £15,000 – or £15,000 profit if you are self-employed. To find out how the student loan is repaid visit www.direct.gov.uk and www.aimhigher.ac.uk.

Part-time students can apply for fee grants (to help with tuition fees) and course grants (for books and travel etc.). The size of these grants will depend on household income, whether you have any dependents and the intensity of the course – a part-time course taking twice as long as a full-time course has an intensity of 50%.

These grants do not count as income when your benefit entitlement is being calculated.

Disabled students can also apply for the Disabled Students Allowance which does not depend on household income. The structure differs slightly across the different countries of the UK.

Most importantly top-up fees do not apply right across the UK, for example they are not charged in Scotland where there are no tuition fees for Scottish students and there is a fixed rate fee for students from the rest of the UK.

If you have applied to go to a university in another country within the UK from the one in which you live make sure you have all the necessary information by visiting the websites shown below.

Apart from any money you receive from your parents you will need to get income from a variety of sources including student loans, overdrafts, Access Funds, grants, bursaries and part-time jobs.

Most students take out student loans from the Student Loan Company (SLC).

You apply for these loans online at www.direct.gov.uk/studentfinance or you can contact your local authority (LA). Alternatively you can contact studentfinance direct on 0845 607 7577 for advice.

The SLC or LA will carry out the means testing to determine how much you can borrow. Interest rates on student loans are low and rise in line with inflation. This means that what you repay will be broadly the same in real terms, as what you borrowed.

You only start to repay when you have left university and your income has risen above a certain level. Student Loans are now provided in two parts for both Fees and Maintenance.

To receive a Student Loan for Fees you must be a UK student who has been resident in this country for the past 3 years and studying full-time for a qualifying degree.

You may be unable to receive a loan if you have undertaken previous study. In addition for Student Loans for Maintenance you must be aged under 60. Part-time students are not eligible for loans but can apply for fee and course grants.

You can borrow up to the full amount of tuition fees charged by your university under the Student Loan for Fees.

The amount you can borrow under the Student Loan for Maintenance or ‘living cost loan’ depends on where you live whilst studying, your income and that of your household, the location of your course and the year of study you are in.

It will also depend on how much maintenance grant you are entitled to.

These figures change each year so you should check the information at www.slc.co.uk or contact your Local Authority (LA) for advice. To find your local education authority contacts visit www.studentsupportdirect.co.uk and then search for the LA Finder.

How it works

For the income assessed, or means tested, element of the Student Loan for Maintenance your LA or SLC will work out the remaining household income after taking account of certain things such as pension contributions.

This is usually done based on the figures from the previous tax year relating to you, your parents and if applicable your spouse/partner.

Having calculated this, the LA or SLC then applies a sliding scale to work out the level of household contribution and whether you are entitled to borrow any additional money.

The lower the household income the more you will be able to borrow. Remember however any amount you receive in maintenance grant will be taken into account.

How to apply

Applications for fee and living cost loans along with maintenance grants are looked at together so even if you feel it unlikely that you will get any income assessed student finance you still need to apply to your LA to access the Student Loan for Fees and Maintenance.

The process also allows you to apply for extra help if you have children, a disability or special travel costs.

You should apply as soon as possible either using a paper application form or online at www.direct.gov.uk/studentfinance.

The forms you need

Always fill in your LA form (called a PN1 for new students, PR1 form for continuing students) because if you don’t it will stop you obtaining a student loan.

Do not wait until you have a confirmed place to apply, simply fill in the details of the course that you are most likely to attend. If your chosen course changes after you have applied you must tell your LA or SLC immediately.

To complete the assessment of whether you are entitled to financial help your parents and/or you will have to fill in various financial details on the form. You will also have to supply supporting evidence with your form such as your passport and national insurance number.

Once your local authority has received your application form it will then be sent to Student Finance Direct who will process the application. Within six to eight weeks you should receive a notice from Student Finance Direct detailing the support you are entitled to.

In time you will be sent a Financial Assessment by your local authority and a Payment Schedule Letter from Student Finance Direct. When you register for your course at the start of the year you need to take these documents with you.

Your university or college will now confirm that you have started your course and a few days later the money you are entitled to should be in your bank account.

Remember that the interest on the loan is very low, at a rate linked to inflation. It is normally a good idea to take out the full loan offered even if you do not need it as you can put the money in a bank account where it will earn interest.

If you want to apply for financial help after your course has started you must do so within nine months of the first day of the academic year for your course.

For more information go to www.studentfinancedirect.co.uk.

Repaying the loan

You will start repaying your loan in the April after you have graduated assuming you are earning above the minimum threshold. Repayments are currently 9% of your income over £15,000 per year.

Money will usually be collected through the PAYE system i.e. directly out of your pay like other taxes.

You can make additional voluntary payments at any time to pay off the debt sooner. To guide you, an average graduate with a good second class degree could be expected to earn around £20,000 p.a. This would mean you repay 9% of £5,000 (£20,000 less £15,000) which is £450 a year or just under £9 a week.

If you stop work or your earnings fall below £15,000 you do not repay a penny. Additionally for first time borrowers, the Government will write off any of your student loan balances (except arrears) which are left unpaid 25 years after you leave your course.

Additionally students who enter repayment in April 2012 or later will be eligible for a repayment holiday of up to 5 years.

This means that they will have the opportunity to put their payments on hold at a time of their choice, for example when buying a house or starting a family.

Remember though it is only the payments on hold as the interest will continue to accrue as normal.

This is available through your college or university and provides help for students on low incomes who need extra financial help. To be considered by the Fund apply to your college’s student services department.

You will need to prove that you are struggling financially and that you have already taken out the maximum amount of student finance that is available to you.

Payments are usually given out as grants, although sometimes they can be given as short-term loans. Similar arrangements apply in Wales through the Financial Contingency Funds (FCFs) scheme.

Access to Learning Fund

Universities and colleges charging the highest rate (currently £3,070) of fees for some or all of their full-time courses will provide extra financial help to students, particularly those from low income families. This help can be in the form of discounted accommodation or a bursary and will not have to be repaid.

If your tuition fees are at the maximum level of £3,070 and you qualify for a full Maintenance Grant (£2,765 in 2007/08) you must receive a bursary of at least £305 a year.

Many universities and colleges are offering much more with the typical bursary on offer being worth £1000 a year. It is well worth checking out what is on offer at a number of universities/colleges before making your final decision.

The bursary map available at www.direct.gov.uk will help you with this. You can of course contact a college or university to ask or use the search facility on the UCAS website, www.ucas.com.

Even if you do not qualify for this type of bursary many universities and colleges will have other bursaries and scholarships open to a wider range of students which can be valuable sources of additional funds.

Grants

Maintenance Grants are available for students from lower income families to help towards the cost of going to university. These grants are non-repayable and the size of the grant will vary according to household income but can be up to £2,765 in 2007/2008. Around half of all full-time students will be eligible for some form of grant.

The grants are usually paid in three instalments – one at the start of each term. If you are eligible to receive income related benefits whilst at university you may also be able to claim a Special Support Grant. Part-time students may also be eligible for fee and course grants. www.aimhigher.ac.uk or www.direct.gov.uk will provide you with more information.

For low income Scottish students studying in Scotland there is the Young Students’ Bursary of up to £2,510 per year.

Additional supplementary grants are also available for certain categories of students such as those who are lone parents. For more details contact www.saas.gov.uk.

University or College Bursaries

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.nusonline.co.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.

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 unemployment benefit, 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:

1. Income Support

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

• a single parent
• a disabled student who
  1. qualifies for the Disability or Severe Disability premium
  2. qualifies for the Disabled Students Allowance because of deafness.

2. 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 grants/loans for fees together with Special Support Grants are not counted as income, however, Student Loans for Maintenance and Maintenance Grants are considered as income.

For more information about students and the benefits system you should contact your local Job Centre Plus. Part-time students may be able to claim benefits if they are on a low income.

3. 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.

1. 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.

2. 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.

3. 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:

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 when you day everyday things like go to the supermarket, the pub or the kebab shop.

These little things 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 and it will allow you to budget easily using 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!

When you budget...

1. 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.

2. 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.

3. 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.

4. 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.

5. 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?

How to Budget

1. 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.

2. 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!

3. 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.

4. 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.

5. Drawing up a budget (also known as a financial statement)
Many items go into a budget and to help you out an example is given below.

6. 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.

7. 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:
  1. taking advantage of the free overdraft and other facilities offered by your bank or building society.
  2. 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	Nil
(b) any increase over agreed limit negotiated with your bank	5% – 8%
(c) any unauthorised borrowing – Beware!	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% – 100%
7. Unlicensed Money Lenders (loan sharks) AVOID!	Whatever they can get away with

* 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.

A special ‘Student budget sheet’ (Excel) is available for download free of charge. This can save you a lot of time and, in the long run, a lot of money while you are at university!

Try to keep your budget up to date by spending a few minutes once a month to go 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!

INCOME		£
	Loan/grant/bursary Support from family Part-time job Other
	Total monthly income
EXPENDITURE
Formal commitments	Rent Water Service charge Insurance Electricity Gas Phone/mobile/internet TV rental TV licence
If you have a car	Road tax Insurance MOT certificate (if your car is over 3 years old) Residents’ parking permit
Everyday spending	Food Toiletries Books/stationery Newspapers/magazines Photocopying/printer ink/toner cartridges Launderette Chemist Public transport Sports/hobbies Videos/DVDs/CDs Alcohol/drinks Cigarettes Other
If you have a car	Fuel Servicing/maintenance (allow for new tyres) Parking
Occasional costs	Christmas Birthdays Holidays Subscriptions Clothing Trips out Meals out Balls Graduation costs
Total monthly expenditure
Balance	monthly income LESS monthly expenditure
monthly surplus/(deficit)	Remember to calculate everything on a monthly basis

 

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.

Your Local Authority
If your own or your parents’/spouse’s financial position changes significantly during the course of the year, you should let your LA 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:

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 visit your local Citizens Advice Bureau. Both 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 – 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.
  
• When you use a washing machine, oven and so on, try and fill them to save energy costs.
  
• 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.
  
• 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 £100 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.

* Everyone is allowed to earn a certain amount before they pay tax and this is the personal allowance. In 2007/2008 it was set at £5,225.

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 Inland Revenue will, however, send you a form P91 which you should fill in and return so that the Inland Revenue 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 (formerly the Inland Revenue) website includes a calculator to work out the amount you can expect to receive back. The HMRC website www.hmrc.gov.uk/students and the leaflet Collection of Student Loans (IR59) have the latest information.

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

Aim Higher
www.aimhigher.ac.uk

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

Credit Action
2 Ridgmount Street, London WC1E 7AA
Tel: 0207 436 9937
www.creditaction.org.uk
www.moneybasics.co.uk
Remember you can download the Spendometer for free at www.creditaction.org.uk

Consumer Credit Counselling Service
Tel: 0800 138 111
www.cccs.co.uk

Department for Innovation, Universities and Skills
Tel: 0207 215 5555 or 0870 0010 336
www.dius.gov.uk

Northern Ireland Department for Employment and Learning
Tel: 028 9025 7777
www.delni.gov.uk

Educational Grants Advisory Service
c/o Family Welfare Association 501-505 Kingsland Road, London E8 4AU

Student Advice Line
Tel: 0207 254 6251 (available Tuesday, Wednesday and Thursday 2-4pm)
www.egas-online.org.uk

National Union of Students
2nd floor, Centro 3, Mandela Street, London NW1 ODU
Tel: 0871 221 8221
www.nusonline.co.uk

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

Student Finance Direct
Tel: 0845 607 7577
www.studentsupportdirect.co.uk

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

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

Student Loans Company Limited
100 Bothwell Street, Glasgow G2 7JD
Tel: Freephone 0800 40 50 10 Disabled helpline 0870 606 0704
www.slc.co.uk

Support4learning
www.support4learning.org.uk/money

UniAid
Tel: 0207 922 7790
www.uniaid.org.uk

Welsh Department of Education, Lifelong Learning and Skills
Tel: 0845 010 3300 (bilingual greeting), 0845 010 4400 (Welsh language greeting)
Email: education.training@wales.gsi.gov.uk
www.new.wales.gov.uk/topics/educationandskills/?lang=en

BBC Student Guide
www.bbc.co.uk/radio1/onelife/education

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.

We very much hope that this information 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 436 9937.

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 at college.