Factsheet for students
Not all debt is bad: bad debt is bad
The cheapest long-term debt you’ll get is the official Government-
backed Student Loans Company (SLC) loans – the rate’s 1.5% from
September - and should always be the first place to borrow from.
You're effectively given two loans - one to cover your tuition fees and
one for maintenance (living allowance) – with nothing to repay until
after graduation and then the less you earn the less you have to repay.
Plus, if you earn less than £15,000 you won't have to repay it at all. For
full details of exactly how this works read
Anyone who first took out a loan to cover university fees or living
expenses from 1998 will pay £150 a year in interest on the 1.5% rate,
assuming a constant £10,000 debt. However, those still paying off a loan
taken out pre-1998 will pay 4.4% interest.
Note your student loan will ONLY be paid once you’ve registered for
your university (before your course starts) – NOT before you get there.
As a rule, avoid pretty much any other debt out there except 0% student
overdrafts i.e. anything charging a commercial rate of interest such as credit
cards and bank loans. If you don't have an income, you can't repay the debts
which means the interest will compound and build quickly leaving you owing
Grab extra funding from your university/college and student union too
If your tuition fees are the full £3,225 and you're eligible for an entire
maintenance grant – see www.moneysavingexpert.com/family/student-
loans for an explanation - your uni will have to give you a £319 bursary
(which doesn't have to be repaid).The average pay-out is £800 so you
may get more. Students suffering financial hardship may get access or
hardship funds; there is no one definition for ‘hardship' so if you feel you
need it, apply!
Also try the university's welfare department. Student parents, those
with disabilities or other special circumstances may receive extra cash
and those studying medicine and related subjects or new teacher
training students also have payments available. Plus try the Students'
Union, it may have its own independent hardship fund and be able to
help out there.
Whether you're short of cash or not, there are bags of scholarships for
academia, sports, hobbies or even just for being the child of an airline
pilot. Use the Scholarship website at www.scholarship-search.org.uk or
go to a local library for a wider range of grant directories. The
Educational Grants Advisory Service at www.family-action.org.uk/ also
offers info on alternative funding, including educational trust funds.
Pick the best student bank account for you
Big high street banks desperate for your custom (in the hope you
become a high-earner and stick with them for life) offer interest-free
overdrafts to lure you in. An overdraft is normally expensive but for
students it's usually 0% up to a set limit i.e. you don't pay to borrow this
Watch out: once you're no longer a student, banks then start charging
expensive commercial rates of interest whereas student loan debt
always remains cheap.
At that point, make sure you get the top ‘graduate account’ which
continues to offer 0% overdraft for a few extra years.
The current highest-guaranteed student overdraft limit comes from The
Co-operative bank offering a £1,400 0% overdraft if you’re accepted. In
the second year of study you'll be able to get £1,700 and £2,000 in the
To find the right student bank account (even if you're already a student,
as you can switch and gain) read the guide at
Think of your student money like ‘income’.
For most adults, the mantra is ‘don't spend more than you earn'; for students
it's ‘don't spend more than you've got' as much of the cash is borrowed
anyway. There's a set amount of money coming in, and that's all you've got to
As a rule of thumb, aim to live off the official student loan, any money from
parents, the 0% overdraft from the bank, and no other borrowing. Spend more
than you've got, and you'll build up more debts. Since you're a student, if
you've exhausted all the right debts, the alternative borrowing isn't good at all!
Budget like crazy
Everyone needs to budget, by planning their spending, and it's never more
important than when you're a student` to keep outgoings as low as possible.
Doing this keeps you in control of your money and ensures you're not left
without cash. My free Budget Planner tool at
www.moneysavingexpert.com/budgetplanner will help you work out exactly
what you’ve got coming in and where it’s going.
Get a job!
While studying is a priority, many students will work so if you don't have
enough cash, don't borrow on expensive credit cards - try to find a job
instead. The earlier you try to get work in the year (try and arrive before
other students) the better your chances.
Sorry students, you aren't special, you pay tax just like anyone else! However
there is one piece of good news; neither the Student Loan nor the
Maintenance Grant count as income, therefore they're untaxed.
If you earn less than £6,475 and only work during the holidays, ask your
employer for a P38(S) form (or you can download it directly from
www.hmrc.gov.uk and you'll be paid tax-free. If you work throughout the year,
then you need to pay tax as you earn. If you earn under the threshold, contact
your local tax office to reclaim any overpaid tax at the end of the tax year (5
Travel for less...or next to nothing
When you’re in full-time education, it makes great financial sense to purchase
a travel card. For just £26, the 16-25 Railcard saves you 1/3 off rail fares across
Britain for a year.
Alternatively, sister companies www.megatrain.com/uk or www.megabus.com
for train and bus fares across the UK for £1 each way plus a 50p booking
charge per transaction. Trips include Edinburgh, London, Manchester, Cardiff
and many more. Also keep an eye out for discount tickets at rail and coach
operators (see an updated list at www.moneysavingexpert.com/deals/cheap-
Coach company National Express regularly runs discount tickets costing a fiver
or less, and is currently selling 250,000 seats for £5 or less across certain routes
for travel up to and including Sun 31 October. To see if your route is included,
Use your student card for discounts, even when none are offered.
Many places will give you a discount if you flash your student (or NUS)
card. Yet even if they don't offer it why not ask for one? Many places will
help you out if you haggle. It's chutzpah time. Live by the mantra ‘never
buy without a try’.
Be a ‘voucherista’
Whether it’s for a birthday, celebration, commiseration or seeing the
parents to top up on goodies, you can save a fortune on the cost of
meals out using discount vouchers. A daily updated list is at
www.moneysavingexpert.com/restaurantvouchers. You can also get
money off clothes, shoes, beauty goods, days out and almost anything
else you can imagine. Go to www.moneysavingexpert.com/deals/.
Be a MoneySavingStudent
You can hive off hundreds from the cost of student life with careful
moneysaving: from mobile phones to music, books to bills and bank accounts,
cinema to socialising, and food to fashion.
For example, to split cheap food costs, try bulk-buying with friends at online
clearance food and drink website http://www.approvedfood.co.uk/) to get
massive discounts on big brands that are short-dated or slightly out of date.
As for shared bills when living together, always pay by direct debit for your gas
‘n’ electricity to get up to 10% off as well as comparing providers for the
cheapest deals (go to www.moneysavingexpert.com/gaselec) as well as
seeking the best broadband and home phone deals (visit
www.moneysavingexpert.com/homephones). You can halve many home-
phone call costs without changing supplier with a special access code or
number to override your provider’s charges.
Set up a free account with no-frills phone company www.18185.co.uk, dial its
access code (surprise, it’s 18185!) from your landline then the number you’re
While BT charges 5.9p PER MIN daytimes, it’s just 6p PER CALL – saving over £3
an hour, and slashes mid-week mobile call costs too.