Rent, food, books and, of course, socialising can all make a big dent in your finances, so it’s important you sort out your money before you start student life.
Here, we take a look at what financial help is on offer, explain how it all works and how you can apply…
The vast majority of students will need to take out student loans to cover their university costs. There are two types of loan available; the maintenance loan, which you can use to pay for things such as books, rent, food and general living costs, and the tuition fees loan, which is paid direct to your university and, as it says on the tin, covers your tuition fees.
The maximum Tuition Fees loan you can get if you’re starting university this year is £9,000, while the maximum Maintenance Loan you can get is £5,500 if you live away from home (it rises to £7,765 if you’re living away from home in London, but falls to £4,375 if you live at home while you’re a student).
Part of the maintenance loan is means-tested, so you might not get the maximum funding available if your family has a high income – you may have to provide details of your family’s income. You can apply for your student loans via this link: https://www.gov.uk/apply-online-for-student-finance.
To find out more about student loans, how much interest you have to pay and when they must be repaid, read our student loans article here. (Insert link to my student loans article)
Grants and hardship funds
If you have a low family income, you should be eligible for the maintenance grant, which is means-tested but which doesn’t have to be repaid. You can apply for it at the same time as your student loans.
The maximum grant available for 2013/2014 is £3,354, available to full-time higher education students with a household income of £25,000 or under. You get a partial grant if your household income is £42,611 or less.
If you get a grant, the amount you can borrow under a maintenance loan is reduced proportionately.
Lots of universities offer additional special grants or hardship funds which can help towards the cost of your studies. Some are only available to those with very low family incomes. Or who are struggling to stay in higher education due to financial pressures. Check with your university to see what they offer and how you can apply.
It’s also worth finding out whether the university you have applied offers its own bursaries or scholarships. You can find this information on the website www.scholarship-search.org.uk.
Most student accounts come with generous interest-free overdrafts. These provide one of the cheapest ways to borrow money to pay for your time at university, but make sure you don’t exceed your agreed overdraft limit as you could be hit with hefty charges.
The Halifax Student Bank Account, for example, offers an interest-free overdraft up to £3,000, but the actual amount you’ll get depends on your personal circumstances – so if you’ve had any problems managing your money in the past, you’re unlikely to be offered this much. If you exceed your agreed overdraft limit, you’ll be stung by a hefty equivalent annual rate (EAR) of 24.2%, so this should be avoided at all costs.
Similarly, Santander offers an interest-free overdraft of up to £1,500, but if you exceed your agreed limit, you’ll have to pay a £5 daily charge. You can only be charged for a maximum of 10 days in any given month, but that still amounts to a hefty £50.
You can apply for a student account online, or in a branch. You will need to provide proof of your identity, as well as evidence of your university place.
Student credit cards
A student credit card should only really be considered as a last resort, as interest rates are often high and the charges can soon mount up if you’re not able to repay what you owe quickly.
Rates are usually comparable to those offered by cards in the wider market, so there’s no preferential treatment for students, and credit limits are typically low.
For example, HSBC’s Student Credit Card has a representative annual percentage rate (APR) of 18.9%. The card has a credit limit of £500. Similarly, Halifax’s Student Credit Card, which has a credit limit of up to £1,000, has a representative APR of 19.9%.
Try to steer clear of student credit cards if you can - you’re much better off sticking to a debit card and using your interest-free overdraft.
Get a part-time job
Working when you’re at university can be a great way to bring in extra cash – and means you can keep borrowing to a minimum.
If you get a part-time job while studying you can earn a certain amount of income in each tax year before paying tax. If your total income is below your ‘personal allowance' (currently £9,440) in the tax year you won't have to pay any tax.
If you’ve worked before becoming a student, you should have been given a P45 from your previous employer which you should pass on to your new employer. If you’ve never worked before, you’ll need to complete a Starter Checklist, which your employer should supply (you’ll probably complete it online). Your employer will use either your P45 or the Starter Checklist to find out your tax code from HM Revenue & Customs.
There is usually plenty of competition for student jobs, so try to find work as soon as possible once you start at university. Student work often involves shifts working in a bar or supermarket, and pay rates vary. However, you should never be paid less than the National Minimum Wage, which is currently £6.19 an hour.
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