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.
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.
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.
Monthly repayments will obviously depend on the amount you owe. Sometimes the bank will give you 10 years to repay, but don’t make this your goal. The sooner you get out of the debt the faster you can enjoy the success your top university degree has brought you.
Fixed vs. Variable. What does it all mean? Interest rates fluctuate, and whether this will be in your favour cannot be predicted. A wide range of fixed interest rate loans are available and are often a better option for undergraduate students. Additionally, interest rates are more affordable in the earlier stages of the repayment period. Meeting with a financial advisor is a good first step to gaining all the information needed for choosing the right option for you.
Applying for a loan through your school’s financial aid office is another option for new students. Some universities within the World University Ranking’s top 100 universities offer funding to domestic and international students, so don’t fret if your choice of school is abroad and you’re short cash. McGill University, in Canada, for example, offers international students two different funding options. If your school of choice doesn’t help international students fund their studies, they may participate in such programs as the University of British Columbia’s Work Learn program, which allows international students to work on campus, and for a pretty decent rate.
Your country of nationality should have various organizations, or at least one, to help you choose and handle your loan, as well as tackle other student finance issues. Federal Student Aid, in the US, and The Student Loans Company, in the UK, are two such organizations. Knowledge is key to avoiding excessive debt so don’t be afraid to ask for help. And after all, money is the last thing you want to be thinking about throughout your exciting university career!