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Debt Control: Making the grade without making a huge bill
For some of us all we have to worry about at university is getting our papers in on time. Meanwhile, back in the real world, the majority of us undergraduates have a myriad of things to think about, and money and student finance often tops that list of what’s on our minds.
Student finance has always been an issue when it comes to applying for undergraduate programs at top universities, and almost all student survival guides address this matter. In the UK alone, student debt has increased a quarter from last year, with £4,000 the average debt a student in the UK will acquire in one year, according to UK student resource provider Push. Stateside, student debt frequently makes the news – and it’s not often good news. Scandals have recently exposed situations where school financial aid officers have been given incentives by lenders to push specific packages and loan products. Some lenders discriminate against undergraduate students with a less than perfect academic record, or those who don’t choose a school on the lender’s pick list.
So how can we enjoy university life without worrying too much about student finances? And more importantly, how can we graduate without a big bill to repay within the years to come? Sticking to a budget and not being taken advantage of by attractive loan and credit card offers are two essential things to keep your debt down, if present at all.
Create a budget and stick to it
Basic but beneficial. Create two tables – one listing your income and the other listing your essential and optional expenses. In your expense table include everything from housing to cinema visits. Be realistic. You do know the true cost of a Saturday night out.
Cut costs where possible
- Get a student bank account. Compare services and charges of different banks. Overdraft limits and related charges are essential matters to investigate before choosing a bank
- Authors of books like Beyond Baked Beans Budget; How to Boil an Egg; and The Classic 1000 Student Recipes have taken advantage of poor undergraduate students who deserve proper nutrition without a hefty price tag
- Look for discounts whenever and wherever possible
- Many shops, restaurants, and bars offer discounts to undergraduate students
- Don’t just choose any old utility company to run your electricity, gas, telephone, or Internet – do some research! Get online and compare prices. In the long run, utility bills can add up.
- If you can’t afford a nice haircut, go to a trainee. Most hair salons need ‘hair models’ and the trainees are supervised by experienced hairdressers.
When you need a loan (and have to repay it)
Before you even think about asking for a loan, make sure your bank is giving you all they can offer; that is, if you choose to borrow from a bank. Big banks often have branches on big campuses and are accordingly good with helping students manage their finances, and advising them of their best options when it comes to accounts and credit cards. Some banks offer interest-free overdrafts. Make sure yours does! Even if you are certain you can stick to a budget emergencies do occur and it’s good to know you have a back-up plan.
One undergraduate student at the University of Manchester told me he was sucked into flashy credit card ads offering 6 months free of interest. He ended up with £18,000 debt. Another student who graduated five years ago still owes £14,500. Don’t let this happen to you. One credit card with a reasonable limit is helpful; ten become a disaster.
It can be a bit scary trying to find a loan. Bank of America alone offers at least 8 different loans for students. Barclays, in the UK, seems to offer a less complicated selection, and even gives you a typical rundown of a loan and its repayments (a loan of £5,000 with a repayment term of 60 months would be £102.70 per month at an interest rate of 7.9%, for example). Many banks like Australia’s Commonwealth Bank offer students the opportunity to only begin repaying after graduation. This may be good for some but it can also be a cause of unnecessary stress come your first few years of employment. Weigh your options, and sleep on it.
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