5 Signs You’re Wasting Your Student Loan

Guest post: Ruth Bushi

1. You treat your cash like it’s red hot

“My mate spent his second loan in six weeks,” student Ben [name changed] told us. “He had nine weeks till the next loan came in. He bought 285 packets of Aldi noodles and lived off them for the duration.”

There’s nothing like a cash injection to give you a touch of the Donald Trumps – but the smart money’s on making your student loan last longer than the weekend.

Set cash aside for the essentials first (rent, bills, books, food, savings, travel or whatever) and then allocate non-essential spending only on what’s left. Whether it’s rent or Rizlas, though, always check if you can shave your costs by getting a better deal, buying in bulk or claiming a student discount.

2. You don’t get what you’re owed

Sussing out student finance can be trickier than a Derren Brown boxset, but it pays to know what you’re entitled to and how to get it. We’re not advocating getting a student loan for kicks, but it sure pays to make a considered choice in the matter.

While higher education funding isn’t perfect, student finance beats private borrowing hands down on fees, interest and repayment terms. If you’re entitled to a student loan – and especially if you won’t make it through university without financial support – you need to get in early and make sure you re-apply where necessary – and then make your loan pay its way.

Student finance isn’t just about grants and loans, though. There are all kinds of bursaries, scholarships and emergency funds which many students are entitled to, especially in the event of a cash crisis. 

Top tip: Find out what counts as ‘taxable income’ when you or your folks are prepping the paperwork. For example, if you’re a UK resident declaring money from Child Tax Credits, Disability Living Allowance or interest earned from ISAs, you could be short-changing what funding you get.

3. You don’t do saving

If you’re so close to the breadline you can taste crumbs, saving money may seem impossible – yet it’s a guaranteed way to boost your finances.

‘Pay yourself’ first whenever you get a loan instalment and stash some of it, however small, in a savings account. If you can make it through the year without spending it, you could end up with a nice little nest egg – plus interest – to fund your fancies. Or, you’ll have a buffer to take the edge off a cash-tastrophe. It also sets you up for the saving mentality later on in life, when you’ll need to claw together seemingly ludicrous sums of money for things like mortgages.

To go one better, use your student finance to boost your savings and earn extra income through bank interest. It also works with any extra cash you can spare, whether birthday cash, bonuses or an unused 0% overdraft. The trick is to pile the money into an account that pays decent interest instead, such as an ISA or high-interest savings account. Yes, interest rates are pants-poor right now, but they still beat the big fat zilch you get if you don’t save at all.

In a nutshell: Any student loan you take out will also be breeding interest on your debt. Rather than taking out unnecessary loans that cost you in the long term, find ways to make your essential borrowing pay you back.

4. You buy brand names, brand new

Aside from books, buying secondhand sounds as appealing as a Nicki Minaj makeover. Yet not only is it an obvious money-saver, it can help pay for your purchases, especially with high-cost items which start to lose value very quickly when new – like cars.

Andrew Hallam, ‘The Millionaire Teacher’, would buy low-mileage but reliable second-hand cars, drive them for a year, and then typically turn a grand in profit when he sold them on. It’s a neat principle, and doesn’t have to apply just to a set of wheels. Make ‘recycling’ part of your money mantra to earn back on the gear and gadgets you reckon you can’t live without, or stick with charity and Freecycle finds to do your bit for the planet. And your conscience.

Heads-up: Zayn’s ditched 1D, and so should you. Regularly review your clutter as often as you review your budget and sell or donate what you no longer need. If it’s busted, you may still be able to offload spare parts.

5. You’re not a savvy shopper

If you want to get something for less, ask a student. But if you want to make the most of your student loan, think like a millionaire – they’re known for having big bucks yet being tighter than a waistband at a buffet.

Never buy on impulse – always wait a day or two. If you haven’t forgotten about it by then, see if you can get it secondhand or free. THEN do a comparison shop for the best deal. And THEN look for a student discount, voucher or online discount code to get it for even less.

Top tip: Only buy things you need and save the ‘wants’ for wish lists, birthdays and bribes.

The obvious way to make the most of your student loan is to make sure you’re getting value for money. That means keeping tabs on what services, staff and even library access your tuition fees get you, and being vocal when the return on your investment falls short. In the meantime, get savvy about saving and spending to crunch that credit into shape. Good luck!

Ruth Bushi is an editor at Save the Student, where she writes about saving money and puns a lot. She has degrees in English Literature from Lancaster and Durham Universities, and lives in the North of England. For more tips on how to make the most of your student loan, check out Save the Student's Big Fat Guide to Student Finance.