ADVICE & INFORMATION
Lynton House, 7-12 Tavistock Square, London WC1H 9LT Tel: 0207 380 3390 firstname.lastname@example.org www.creditaction.org.uk www.moneybasics.co.uk Registered Charity No.1106941
At Santander, we are committed to supporting education. Our Santander Universities Global Division now supports a network of nearly 1,000 universities in four continents, with over 50 in the UK. Every year our worldwide funding supports:
• Over 13,000 scholarships. • Over 9,000 travel grants. • Over 4,000 academic, financial and technological projects. Furthermore, we understand the importance of giving you the knowledge to make informed decisions on how to best manage your money. That is why we are also committed to promoting financial awareness through educational programmes, and working with organisations like Credit Action to produce literature, such as this Moneymanual. I hope that you find this Moneymanual a worthwhile and informative guide to organising your finances and managing a budget, not just now but in the future as well. After all, today’s students are tomorrow’s innovators and decision makers. I wish you all the best during your time at university,
Charlotte Hogg Head of Retail Distribution and Intermediaries
For a large number of new students, having to handle limited resources during university will be a big pressure – enough to leave some students in serious financial difficulty, hardly the ideal start to a life of financial independence. By giving advice on: • Student loans and tuition fees, • Banking, • Budgeting, • Money saving ideas, this booklet should help you to make your money go further. “The need for high quality information, advice and guidance for students has never been greater. The National Association of Student Money Advisers (NASMA) welcomes this booklet, and we are happy to support Credit Action on such a useful and informative publication.” Lynne Condell Chairperson, NASMA
“For many students finance can be a big worry. The National Union of Students welcomes this booklet particularly for the practical help it can offer new students who are managing their own money for the first time.” Pete Mercer Vice President, Welfare The National Union of Students
“Investing in education will cost today’s students more than it ever has before. So it is more important than ever that current, and prospective students, make sure that they get a fair deal when making important decisions about their money. This booklet by Credit Action is invaluable.” Mike O’Connor Chief Executive, Consumer Focus
Moneymanual for students
Keith Tondeur OBE Bushara Raja
© 2011 Credit Action
Benefits for students
What to do if you have money worries
Money saving ideas
Credit Action is a registered charity no. 1106941 and a company limited by guarantee, registered in England
A summary of dos and don’ts
Credit Action Lynton House 7-12 Tavistock Square London WC1H 9LT Tel 0207 380 3390 email@example.com www.creditaction.org.uk
and Wales no. 5244075 Helpline 0800 138 1111 (operated by the Consumer Credit Counselling Service) First Published 1994 Written by Keith Tondeur OBE, President, Credit Action Updated in 2011 by Bushara Raja, Education Officer, Credit Action
“Don’t let your money rule you.
Design and production by stephen lown graphic designer
If you manage it, then you’re in control
Credit Action is a national money education charity dedicated to promoting better thinking about money. Credit Action works to equip UK consumers with the skills and tools to manage money well and avoid the pains of over-indebtedness. This book is only a guide to managing money and we have had to simplify some issues and make general
and can save yourself hassle and stress. University is a great time for learning and one of the most important lessons university will teach you is learning how to
comments. Dealing with debt is often extremely complicated and so you cannot hold us responsible for any action you take, or do not take, based only on what is written in this book.
handle your money. This booklet is a great
Martin Lewis Founder of MoneySavingExpert.com Head of the Independent Taskforce on Student Finance Information
way to start to understand your finances before you go and while you are at Every effort has been made to ensure this booklet is accurate and the information provided is correct at the time of print (December 2011). Some information in this booklet can be subject to change. If you have serious problems with debt, you should get expert advice immediately.
university. Students are often stereotyped as cash-strapped and debtridden, but it needn’t be that way if you follow the budgeting basics.”
Here at Credit Action we understand the mixture of emotions you may be feeling about starting university. This should be one of the most exciting times of your life. Yet many of
you may already be worried about managing your money
Financial support for full-time students 2012/13* If you are going on to university or college you will no doubt be familiar with the term tuition fees. In 2012/13
for the first time and by tuition fees and other costs. You are probably
universities and colleges can charge up to £9,000
wondering whether you will be able to manage financially and you may even wonder
a year in tuition fees for degree courses. Some may
whether you can afford to go to university at all.
charge less than this, and fees sometimes vary between courses, so check with your chosen institution how much they charge. Universities and colleges which charge the
But there are ways you can stay in control of your finances. We have created the
maximum tuition fee of £9,000 will need to meet certain criteria, which show that all
Student Moneymanual to encourage you to think about the likely costs of university
students who successfully meet their admission requirements are able to access
and to help you plan for them. This booklet provides useful information on the
courses regardless of their backgrounds.
financial support available to you, from student loans to bursaries and benefits – as well as offering advice and tips on making your money go as far as it can while
Tuition Fee Loan
you’re at university.
You don’t have to pay the cost of university up front and can get help to pay your fees. There is help available with the cost of tuition fees for new full-time undergraduates and
Be sure to make good use of our free interactive tools to help you budget and track your spending such as the Spendometer phone app (www.spendometer.co.uk) and the online Budget Builder (www.creditaction.org.uk/budgetbuilder).
those on full-time distance learning courses. This is in the form of a Tuition Fee Loan.
i Key information to know about the Tuition Fee Loan: • You can take out a loan for the amount you are charged.
It is a fact of life though, that things don’t always go the way you plan them – so if
• The loan isn’t dependent on household income.
you do find yourself in financial difficulty try not to panic! Speak to your family and
• The Tuition Fee Loan is paid directly to your chosen institution
friends and seek out free and independent help and advice as early as you can.
by Student Finance England (Student Loans Company). • You only need to start repaying the Tuition Fee Loan
We hope the Student Moneymanual will help you make informed decisions and help
when you have finished university and are earning
your money go further. Controlling your money rather than allowing it to control you,
over £21,000 per year.
will enable you to fully enjoy your time at university. Everyone at Credit Action wishes you the best of luck with
Entering into higher education can also bring with it other
costs, which are termed living costs or maintenance
costs. These costs could include accommodation, food and travel. All eligible full-time students can get help towards these costs in the form of a Maintenance Loan and a Maintenance Grant.
Michelle Highman * The information on the first 11 pages of this book is relevant to prospective students who normally live in England. If you live elsewhere in the UK, please see pages 11-12.
Bursaries are extra financial help that do not have to be
To help with living costs, eligible, full-time students can apply for a Maintenance Loan. Bursaries are offered by universities and colleges and can
i Key information to know about the Maintenance Loan:
Bursaries and Scholarships
help pay towards your living costs or tuition fees while
• The amount you will receive is dependent on household income (means tested) and where you are studying, for example if you study in London, you are likely to receive more Maintenance Loan than if you are studying outside of London.
you are at studying. Whether you qualify for a bursary or not will depend on the requirements your chosen institution has for this additional support.
• All students are entitled to around 65% of the appropriate amount and the remaining 35% is dependent on household income. The amounts for 2012/13 are:
Also, if you are studying to prepare for a career in social work, medicine, dentistry, or
Students living away from their parents’ home and studying in London Up to £7,675
certain areas of healthcare, there may be bursaries available to you from the NHS.
Students living away from their parents’ home and studying elsewhere Up to £5,500
For more information see www.direct.gov.uk/studentfinance or
Students living at their parents’ home (London or elsewhere)
Up to £4,375
Students studying abroad for at least one academic term
Up to £5,895
The online Student Finance Calculator can help you calculate the financial support you
• The Maintenance Loan is paid in three instalments, one at the start of each term
might be entitled to. Visit www.direct.gov.uk/studentfinancecalculator
directly into your bank account. • Like the Tuition Fee Loan the Maintenance Loan only has to be repaid when you have finished university and are earning over £21,000 a year.
The National Scholarship Programme The National Scholarship Programme (NSP) is new for 2012/13 and is designed to
Remember: The first instalment of Maintenance Loan will be released after you have
help students from lower income families with financial costs associated with going to
registered on your course. It might take a short while to come through so it is important
to make sure you have enough money to tide you over.
i Key information to know about the National Scholarship Programme: • Scholarships are designed for students whose household income is no greater than
Alongside a Maintenance Loan to help with your living costs, there is also a Maintenance Grant. As this is a grant, it does not have to be repaid. In 2012/13, the maximum amount
£25,000 – but institutions will decide how to allocate NSP awards within this group, as having a household income of no greater than £25,000 will not mean you are definitely entitled to support.
of Maintenance Grant available is £3,250.
i Key information to know about the Maintenance Grant: • Whether you receive the Maintenance Grant or not is dependent on household income: Household income up to £25,000
Household income between £25,001 – £42,600
Household income over £42,600
Not entitled to receive the grant
• The Maintenance Grant is paid in three instalments, one at the start of each term directly into your bank account.
• The NSP will provide some extra help to some students on top of the Government’s main student support package. • The support offered by universities and colleges through the NSP will vary, but will be worth at least £3,000 for full time students. • Universities will offer different types of help but it may include discounts on course fees, discounted accommodation costs and cash bursaries capped at £1,000. Remember: Each university and college will provide
• If you receive the full or partial amount of Maintenance Grant your Maintenance Loan may be reduced.
different bursaries and scholarships, so you need to check with your chosen institution what they are offering.
Additional help in particular circumstances
Help for students with disabilities Disabled Students’ Allowances
Disabled Students’ Allowances (DSAs) are grants that provide extra financial help to students who are studying and have a disability, ongoing health condition, mental health condition or specific learning difficulty like dyslexia.
Key information to know about Disabled Students’ Allowances: • DSAs are paid on top of the standard student finance package and do not have to
Childcare Grant and Parents’ Learning Allowance If you’re a full-time student with dependent children, you may be able to get extra financial help in the form of a Childcare Grant and the Parents’ Learning Allowance.
i Key information to know about the Childcare Grant: • The Childcare Grant is financial support to help pay for approved childcare costs and does not have to be repaid. • If you qualify the Grant could cover up to 85% of your childcare costs.
be repaid. • The amount of DSA you get does not depend on household income. • DSAs help pay for specialist equipment, non-medical helpers, or extra travel costs
• The maximum amount of financial support available is £148.75 per week if you have one child, or £255 per week if you have two or more children. • The amount you receive is dependent on the actual costs of your childcare, your
you have to pay because of your disability. • DSAs are paid directly into your bank account or to the supplier of services, such as the university. • DSAs can help pay the extra costs you incur whilst undertaking a course of higher
household income, and the number of children you have.
i Key information to know about the Parents’ Learning Allowance: • The Parents’ Learning Allowance is financial support to help pay for course related
education because of your disability. • DSAs are not intended to cover disability-related expenditure that you would incur even if you were not attending a course of higher education, nor are they intended to cover study costs that you might have regardless of whether you are disabled. You can apply for DSAs if you are studying a course that is: • Full-time (including distance learning) and lasts at least one year. • Part-time, lasts at least one year and doesn’t take more than four times as long to complete as an equivalent full-time course.
costs like books and materials. • The Parents’ Learning Allowance does not have to be repaid. • The Parents’ Learning Allowance could give you between £50 and £1,508 for 2012/13. How much you receive is dependent on household income. • The Parents’ Learning Allowance is paid in three instalments, one at the start of each term, directly into your bank account.
Adult Dependants’ Grant The Adult Dependants’ Grant can provide extra financial help to full-time students with
The maximum amounts for DSAs in 2012/13 are given below: Type of allowance
Up to £5,161 for entire course
Up to £5,161 for entire course
Up to £20,520 a year
Up to £15,390 a year
Up to £1,724
Up to £1,293
General Disabled Students’ Allowance
Help for students with children or adult dependants
an adult that depends on them financially. The maximum amount available in 2012/13 is £2,642 per year.
i Key information to know about the Adult Dependants’ Grant: • The Adult Dependants’ Grant does not have to be repaid. • An adult dependant will usually be a member of your family. It can be your partner (if over 25) but you can’t count grown-up sons or daughters as adult dependants. • The grant is means tested, so the amount you can get depends on your income and the income of your dependants. • The Adult Dependants’ Grant is paid in three instalments, one at the start of each term, directly into your bank account.
Special Support Grant
i Key information to know about the Tuition Fee Loan for part-time students:
The Special Support Grant (SSG) replaces the Maintenance Grant for full-time students
• The Tuition Fee Loan is provided by the Student Loans Company in the same way
on benefits, so if you are entitled to receive a Special Support Grant, you will not be
that it is for full-time students. For more information see ‘Key information to know
able to receive a Maintenance Grant as well.
about the Tuition Fee Loan’ on page 3.
i Key information to know about the Special Support Grant: • To be eligible for the SSG you must meet the conditions for being a ‘prescribed person’ under the Income Support or Housing Benefit Regulations. Students who are likely to qualify include single parents; other student parents (if they have a partner who is already a student) and students with certain disabilities.
• Part-time students will begin repaying their student loan in the April which falls four years after the start of their course. Eligibility for the Tuition Fee Loan depends on the intensity of your part-time course. Your course needs to be least 25 per cent of an equivalent full-time course each year, for example four years instead of one year full-time.
• The Special Support Grant is paid in three instalments, one at the start of each term Part-time students will not be eligible to apply for
directly into your bank account. • The amount available through the SSG is the same as that available through the
How to apply for financial support
Maintenance Loans or Maintenance Grants.
Maintenance Grant, but if you receive the SGG, your Maintenance Loan is not reduced (as is the case with the Maintenance Grant). • The SSG does not count as income when working out if someone is entitled to
Remember to apply for student finance as soon as possible. When applying, you may be asked to provide evidence to support your application. Your parents or partner may also have to supply information to determine
income-related benefits or tax credits.
your total household income.
Access to Learning Fund
You only need to make one application for the main types of help. Remember to apply
The Access to Learning Fund can provide extra help if you’re in hardship and need
as soon as possible.
extra financial support.
To apply for student finance, visit www.direct.gov.uk/studentfinance
To qualify for help you must have applied for all the relevant loans, grants and bursaries.
There are then two ways you can submit your application:
As the fund is operated by universities and colleges, monies might be paid as a loan
• Online – complete the online application form available from the Directgov website.
or a grant, or in a lump sum or in instalments.
Part-time students in 2012/13
• By post – download the application form from the Directgov website and submit it by post.
Fees and Loans
For bursaries and other financial support, universities
In 2012/13 universities and colleges can
and colleges may have different arrangements.
charge part-time students up to £6,750 a year
Please check with your university or college.
in tuition fees for degree courses. Some may charge less than this, and fees vary between courses
so check with your chosen institution how much they charge. From 2012/13 there is help available to new part-time undergraduates to help with the cost of tuition fees. Part-time students can apply for a Tuition Fee Loan which replaces the previous financial support of Fee Grants and Course Grants. 8
What happens next
Once you have submitted your application it will be checked to ensure that all information required has been supplied. The application will then be assessed to see whether you are eligible to receive student finance – and if you are how
Interest rates You will be charged interest on your student loan from the day that you receive your first payment. This interest rate is set at the rate of inflation (as measured by the Retail Price Index) plus 3%. However, once you become due to start making repayments, the rate of interest on student loans will be linked to your earnings.
much you are entitled to receive. • Within six weeks you will be sent a financial notification letter, outlining the amount and types of student finance you are entitled to receive. This is an important letter, which you need to take to your university or college when you enrol. • Once you have registered on your course and the university or college confirms your attendance, the first instalment of Maintenance Loan and any grants are paid into your bank account, usually within five days.
The rate of interest added to student loans will be: • For those earning £21,000 or less, interest will accrue at the rate of Retail Price Index (RPI) inflation. • For those earning between £21,000 and £41,000, the interest rate will increase on a gradual scale, starting at the rate of RPI and reaching a maximum of RPI plus 3%. • At £41,000 or more, interest will accrue at RPI plus 3%.
• The Tuition Fee Loan is paid directly to your university or college on your behalf. • Your university or college will pay any bursary or scholarship entitlement to you.
How you repay your loan Repayments for your student loan are calculated by
You do not start to repay your loans until you have
Repaying student loans
left your course and are earning over £21,000
your employer (or by you if you are self employed) and are then deducted like a tax from your pay. Your payslip
a year. Repayments are based upon 9% of
will show you how much you are repaying on your student
earnings above the £21,000 threshold. For
loan. If you are not earning over £21,000, you will not
example, if you are earning £25,000, the 9%
Northern Ireland, Scotland and Wales
have repayments deducted from your pay.
would only apply to £4,000, meaning you would repay £30 per month. • If your earnings fall below £21,000 then your repayments will stop and will only restart once your earnings rise over £21,000 again.
If you normally live in Northern Ireland, Scotland or Wales and will be studying anywhere in the UK you will need to apply for student finance through the relevant organisation:
• Repayments are linked to how much is earned, not the amount borrowed. • The length of time it takes to repay your student loan (the ‘repayment period’) is dependent on your income and the total amount you have borrowed. To give you
• Northern Ireland – Student Finance Northern Ireland www.studentfinanceni.co.uk or alternatively you can contact the Education and Library Board for assistance.
an indication of how much you will repay overall for your loan, and for how long, use
• Scotland – Student Awards Agency for Scotland (SAAS) www.saas.gov.uk
the Student Loan Calculator 2012 which can be
• Wales – Student Finance Wales www.studentfinancewales.co.uk
found on the MoneySavingExpert website by visiting
Unfortunately, many decisions around the student finance support package for
students living in Northern Ireland, Scotland and Wales are yet to be finalised at the
• After thirty years (from the April you become due to start repaying) your student loan debt will be cleared even if you haven’t finished paying it off. • If you never earn over £21,000, you will not make
time of this booklet going to print. So, for up to date information on the support available to you and how to apply, contact the relevant organisation depending on where you normally reside.
repayments towards your student loan. 10
Benefits for students
Council Tax is a tax on the household, not individuals.
Full-time students are not entitled to receive
If you are a full-time student living in college
Jobseeker’s Allowance (JSA), even if unemployed and looking for work, unless they abandon or are dismissed from their course. This applies to vacations as well. However, there
accommodation, in a house by yourself or in a house
where all occupants are full-time students, the household will not be charged Council Tax. However, normally
are certain exceptions to this for students with particular circumstances. It is best to
you still have to fill in the Council Tax forms, so
contact your local job centre or visit www.turn2us.org.uk for more information.
make sure you do this accurately, or you will be charged. If a full-time student lives with one other adult who is not a student, that household is
eligible to receive 25% discount on their Council Tax bill if the student can prove their
As a full-time student you cannot claim unless you are:
student status. If a full-time student lives with a number of adults who are not students, the household will not be eligible for a discount on their bill.
• A single parent. • A disabled student who qualifies for the Disability or Severe Disability premium.
• Contact your university or college to obtain proof of your student status to show your local council.
Part-time students are subject to different rules; they will not be eligible for the student
As a full-time student you cannot claim unless you are:
discount but might be entitled to Council Tax Benefit if they are on a low income.
• A single parent.
• If in doubt, contact your local council to explain your situation and ask about
• A disabled student.
eligibility or visit www.direct.gov.uk for more information.
• A person who is part of a couple, whereby both are students, with a dependent child. If you receive means tested benefits, not all of the student finance package is counted as income. Currently: • The Tuition Fee Loan and the Special Support Grant are not counted as income. • The Maintenance Loan and Maintenance Grant are considered as income. For more information about students and the benefits system you should contact your local Jobcentre Plus or visit www.direct.gov.uk Part-time students may be able to claim benefits if they are on a low income.
Opening a bank account It is a good idea to shop around the high street banks
for a bank account. When looking for an account remember: • Don’t just join for the incentives (although do look out for good offers!) as some banks are more student friendly than others. • To check if their graduate account offers an interest
• Never hand over your card, PIN or chequebooks to someone else to use – no matter what they tell you they need it for! • Never pay a cheque / transfer into your account for another person and provide them with the cash. • Never buy things on your card for other people. • Beware of offers online that seem ‘too good to be true’ – especially cheap electronic goods or well paid ‘working from home’ jobs – they are very likely to be scams. • If you are paid a cheque, always wait a full 6 days for it to clear – then you can be sure the money is yours.
free overdraft. You don’t want to have to clear your
If you are unsure about credit, what the different types of credit mean and their
overdraft the minute you graduate. Most banks
advantages and disadvantages, Credit Action and NUS have created a new resource
offer a few years’ grace.
called Credit Crunching: a student guide to credit. This is free to download at
• To compare the features of different accounts on internet comparison sites such as www.moneysupermarket.com To open a student bank account complete an application form
Who can apply?
from the bank or building society of your choice, and take it to
Student accounts are only available to full-time students who are 18 or over. This is
your nearest branch, along with proof of your student status.
because legally you can only take on your own credit commitments when you are 18 or over. You must be studying for a degree or equivalent qualification at a university;
If you are opening a new account with a particular bank, you need to provide proof of identity and address – your passport and/or driving licence should be ideal. You may
college of further education; teacher training, nursing or agricultural college. You will need to supply evidence of your student status. These accounts are not available to people who are still at school or studying for ‘A’ levels or equivalent.
also be able to apply online for an account. Try and open your bank account before you arrive at university as cheque books and cash cards can take a
The benefits Interest free overdrafts – many banks and building societies recognise that money is
number of days to come through. Also, some banks do not
in short supply for most students, and so they provide interest free overdrafts to a
send cheque books to colleges for security reasons, so it
certain amount. This figure tends to increase each year as you progress through your
makes sense to open your account before. Cheque
books can go astray, so make sure you take some cash with you for the first few days.
‘Free’ banking – most banks and building societies will waive the normal charges for standing orders and direct debits. Furthermore you should be paid interest when your
It is so important to be savvy about how you use your bank
account stays in credit although this is likely to be at a very low rate.
account and associated products, like your debit card. Here are 5 top tips to make sure you stay safe.
Debit cards – you will almost certainly be offered a debit card when you open an
Online banking – having a bank account which you can manage online makes
account. A debit card can be used in shops displaying their logos and your current
managing your money that little bit easier. It allows you to set up direct debits on bills
account is debited a day or two after making your purchases. This allows you to spend
and other commitments so that they are paid automatically (so you can’t forget!). You
what is in your account or within the limits of an agreed overdraft arrangement. Debit
can, also at a click of a button, see where you are up to with your money.
cards also allow you to obtain cash from cash machines – but remember only take out what you really need, or else you are likely to spend more than you need to!
Additional borrowing – it is vital that if you feel your financial needs are going to be higher than the interest free overdraft you have been given, that you contact your branch
Credit cards – (e.g Mastercard, Visa and Barclaycard) can be very handy – particularly
and reach agreement on a figure that you can borrow. Special low rates of interest could
for buying online or travelling abroad – but also very seductive to the hard up student.
well be on offer to you. In any case get in touch. There is every reason to feel confident
If you do use one, be sure that you can pay the credit card bill off in full each month,
about your application. Bank managers see students as having very good potential so
or that you have a stable income to repay your debts. It is very easy to run up a
be bold! Below is an example of the type of letter you could write to your bank manager:
significant debt with your credit card and then be unable to repay it – so be careful. Although, it can be useful to use your credit card for some purchases while at university to help build up a good credit rating – but only do this if you are able to pay
the bill off in full.
Bank Manager’s name and address
Be aware that using your credit card for things other than regular purchases can be
very expensive. For example using a credit card to withdraw money from an ATM is treated as a ‘cash advance’. This means you pay interest charges up to 30% APR! Make sure you understand completely how a credit product works before using it. Travel facilities – banks recognise that many of you will want to travel abroad during vacations and you may well be able to obtain commission-free foreign currency and/or travellers cheques. Insurance – many banks and building societies offer
Re: (your account number) As you know I am a student at ................ Although I have been budgeting (and making full use of your free overdraft facility) I am struggling to make ends meet. I wonder if you could let me know what the next steps are for me to request an increase for my overdraft facility. I am happy to discuss my financial requirements with you. Thank you for your attention. Yours sincerely (Signed)
personal insurance. These policies usually cover clothes, books, stereos etc. For a small extra premium you can usually add your bike as well. Before taking out a policy check that you are not already covered by your parents’ home contents insurance. Personal Accident Insurance may also be included and will cover your time at home as well as at college. It is also a good idea to shop around. You don’t have to take your bank’s insurance!
Remember too that if you go overdrawn without authorisation the interest rate you are charged will rise steeply. Other incentives – depending on what takes your fancy these range from cash through to CDs and pizzas! Also when choosing your free gift, think about the long term use of it. A fifty pounds cash incentive may sound good but it soon goes, so go for something that will benefit you over the long term.
Every month, you should automatically get sent a bank statement in the post, detailing
Budgeting may seem dull, but there are several really good reasons to budget:
all your transactions. This will include any interest or charges relating to your account
1. It gives you an accurate picture of your financial situation.
and give you an up-to-date balance. Extra copies can be obtained by phoning your
2. It could well enable you to reduce your spending as you identify certain areas where
branch (you may be charged for this service) or using a cash machine which is linked to your bank or building society. An excellent way to keep up to date is to register for online banking by visiting your bank’s website. Always remember to dispose of any financial statements by shredding them or cutting them up thoroughly. You don’t want your fun at university being spoilt by identity theft!
you are spending too much, and thus improve your overall position. 3. It will show you (and your parents and bank manager!) that you are handling your money wisely. 4. It prevents you running up substantial debt on which you will have to pay interest and which you will have to repay!
Interest and taxation If your total annual income, including interest, but excluding your student loan is less than your personal tax allowance you can have your interest paid to you gross, i.e. without income tax being taken off. If this applies to you, and it will for most students, you need to fill in an R85 form for each of your accounts. It’s worth asking your bank
When you budget
Look at your priorities When you have first produced your budget, look at what you are spending your money on. Does it accurately reflect your priorities?
or building society if you can register to receive tax free interest over the phone. If not
Unless you are living at home, accommodation will be your largest expenditure. How
the HMRC (formerly Inland Revenue) has a helpline on 0845 980 0645.
much accommodation costs you will depend on whether you are in: • A halls of residence.
Budgeting is the art of keeping your spending
• Private or rented accommodation.
under control – but this is not necessarily as
If you are in a halls of residence be sure to pay the residential
simple as it sounds! However, the time you
fees at the beginning of the term.
spend planning your budget for the coming
Sometimes it is hard to rent privately for just term time and you
year will be time well spent. As a budget has to be accurate to be effective you need to keep track of everything you spend. Therefore, it is important to
will need to bear this in mind if you have to rent for the full year. So it is important to work out how much you think it will cost you every year to live as a student.
monitor your spending even when you buy everyday things at the supermarket, the
If you are in rented accommodation you could set up a standing
pub or the kebab shop.
order to pay the rent monthly.
In conjunction with this you need to try and record accurately what you have spent
Push produces a table of figures which you might find useful as a
using cheques (writing on stubs makes this easy) together with debit and credit cards
guide to the average cost of living in London or elsewhere. Visit
(your bank does the work for you with your statements!). You should then have a clear
www.push.co.uk to see their latest figures. Your university
picture of your spending.
or college may be able to give you some guidance if you contact the students’ union.
Your individual priorities may vary, but it is essential you have food and drink, accommodation, warmth, and light. Therefore ensure you always set aside enough to
Keep your spending disciplined Use your budget to guide your spending. Stick to the shopping lists you produce as
even small items soon add up and it is likely that you will spend more than you think. • Basic foodstuffs. A useful tool to help minimise ‘impulse’ spending is the Credit Action ‘Spendometer’.
You can download this for free from www.spendometer.co.uk
allowing you to track spending easily on your mobile phone. If you are house-sharing, you will need to come to an arrangement with your house mates about how to pay for bills and food. For example, you might all agree to pay into a shared pot for food, rent and gas and electricity or all shop separately but share the cost of bills and essentials like milk and bread. Different people work differently but communication is key to reaching an agreement that suits you all. It is vital to establish practical priorities in your spending. Always ensure that there is sufficient money in your account each month to cover the basics, as banks don’t like it when
Take it seriously Managing our money isn’t an exciting thing to think about
How to budget
and yet it’s absolutely crucial to learn to do it well, not just for when you’re a student, but for our lives in general. Also, be absolutely honest when doing your budget, as there is no point budgeting if, for example you put nothing down for coffees, text messages or magazines.
you go overdrawn without arranging it beforehand or exceed
When money is tight, as it will be while you are at university, you need to learn how to
an agreed overdraft limit. Because of the extra work involved
make your limited resources go a long way.
in having to ‘bounce’ a cheque or stop payment of a standing order they will make additional charges to your account.
Spread income You should try to spread your income over the whole period to which it relates. If you
Pay by instalments
receive your loan at the beginning of a term, remember that it has to last the whole
Utility charges mount up and your quarterly bills can be much higher than you probably anticipate. For these regular bills, it might be easier to spread your payments
term! Don’t be tempted to spend it all at once – expenses will keep on coming!
over the year by paying by direct debit on a monthly basis.
Monthly bills will mean that you are less likely to face an unexpected or forgotten bill
This is essential – remember that money for tomorrow’s needs is more important than
appearing suddenly. Spreading payments will also help you budget – but do ensure
today’s wants. Sometimes this will mean going without things you’d like to have, like
that you keep enough money in your account to meet these debits as they arrive each
the new DVD, that frothy latte or the nightly kebab, but in the long run cutting these
month. The gas or electricity company may even offer you a discount for paying by
things out could save you a lot of difficulties. Try to take advantage of student offers
such as those available with your NUS card or from www.studentbeans.com
If you are struggling to pay for any items you must get in touch with whoever you owe
Work out your spending
money to straightaway. (An example of the type of letter you could write is found on page 27). Do not be afraid of seeking help from your union representative or welfare
When calculating your budget you need to work out your income (the amount of money you have coming in) and expenditure (the amount of money you have going
officer at college. 20
out) on a regular basis – monthly is ideal. 21
For example, if you get a cheque for £600 which is supposed to last you three months, allocate £200 for each of those months as your income. Similarly, if you have a quarterly phone bill of £60 allocate £20 to each month’s expenditure. Standing orders and direct debits are a helpful way of doing this.
• See if you can get a holiday job to boost your income. Contact a local employment agency, look out for signs in local shops and businesses, or search the internet. If getting a job is viable, try to apply as early as possible and ideally aim to earn enough to repay any debts you may have accumulated during the
You will need to think about where you will source your income from as a student. It is
academic year. By doing so you will be starting a new academic year debt free (except
important to consider how you can finance your living costs at university, so you
for your student loan of course!). This is a great thing to aim for.
minimise the amount of debt you will graduate with. • Can you take a summer job or a part-time job at university? • Are you eligible for a grant, bursary or any other benefits? • How else might your parents or family help you? Will they give you a regular
• Try to cut out paying excess interest. You can do this by: (a) taking advantage of the free overdraft and other facilities offered by your bank or building society. (b) ensuring that if you have done this already you are borrowing as cheaply as you
can. This will almost certainly mean continuing to borrow from your bank or building
Drawing up a budget (also known as a financial statement) Many items go into a budget and to help you out an example is given on page 24.
Review your budget
society within agreed limits. The advantages of this can be seen in the table below. It shows the approximate Annual Percentage Rate (APR*) of interest that you would be charged to borrow from various organisations.
When you have first finished your budget, review it carefully. Go over it again: • Are you sure there is nothing missing? • Do you want to alter your spending habits in any way? • Have you got your priorities right?
Analysing your budget Once you have completed your budget and added up the totals, how does it look? Hopefully, you will be in a position of showing a surplus (some money left over) however small. If you have less money than you need, according to your budget, this is called a deficit. If this is the case, don’t panic! There are things that you can do to improve your position.
Ways of improving your budget position • Try to trim your spending in non-essential areas.
Lender 1. Banks/Building Societies (a) special student packages with agreed initial borrowing limit (b) any increase over agreed limit negotiated with your bank (c) any unauthorised borrowing – Beware! 2. Credit Cards 3. Credit Unions 4. Store Cards 5. Licensed ‘non-standard’ Lenders 6. Illegal Money Lenders (loan sharks) AVOID!
* APR – whenever you are using credit it is vital that you compare these rates as well as the ‘cash’ price. A high APR can make goods cost much more than you would imagine. Use one of the calculators on www.moneybasics.co.uk to help you.
For example, you can do this by avoiding situations where you know you’re more likely to spend, like window shopping, and by being disciplined in writing up shopping lists and sticking to them instead of just seeing what you fancy when you get to the supermarket. 22
Typical rates of interest
Nil 5% – 8% 20% – 30% 10% – 20% 10% – 27% 15% – 30% 50% – 200% Whatever they can get away with
PERSONAL BUDGET INCOME
£ Loan/grant/bursary Support from family Part-time job Other
Total monthly income EXPENDITURE Formal commitments
If you have a car
Personal budget It is a great idea to keep a running budget. One popular way to do this is to use a spreadsheet. Visit the Budgeting section of the Credit Action website to download an Excel Budget Sheet or try using the interactive Budget Builder tool. Try to keep your budget up to date by spending a few
Rent Water Service charge Insurance Electricity Gas Phone/mobile/internet TV rental TV licence Road tax Insurance MOT certificate (if your car is over 3 years old) Residents’ parking permit Fuel Servicing/maintenance (allow for new tyres) Parking Food Toiletries Books/stationery Newspapers/magazines Photocopying/printer ink/toner cartridges Launderette Chemist Public transport Sports/hobbies DVDs/CDs Entertainment – cinema/clubbing etc Cigarettes Other Christmas Birthdays Holidays Subscriptions Clothing Trips out Meals out Balls Graduation costs
Total monthly expenditure Balance monthly income less monthly expenditure monthly surplus/(deficit) Remember to calculate everything on a monthly basis
minutes once a month going through it. That way you’ll always be informed and in control of your financial situation – it should take no more than half an hour – pretty much painless!
Acknowledge emotions If you spend too freely early on, or if you just simply do not have enough income to survive, you can find yourself getting into problem debt. This can cause worry and stress which could easily distract you from your studies. A few years ago an NUS Survey showed that 1 in 5 students considered giving up their course at one time or another, because of the strain of financial worries. This is why it is so important to keep a check on your finances with accurate budgeting, and also to communicate with your bank immediately if things start to go wrong. Whatever you do, don’t panic and think ‘I got myself into this mess, it’s up to me to get myself out’. All banks will have understanding and sympathetic personnel who will be able to offer reassurance as well as solid financial help.
Communicate It is important to be as open as possible about your personal financial position. Therefore it is necessary to communicate with:
Yourself (!) It is easy to put your head in the sand and pretend that there isn’t a problem. The quicker you face up to your difficulties the quicker they will be resolved.
If you fall into arrears, they will share this fact with other lenders through a credit
If you are struggling, or there are things you don’t understand, it’s best to talk with your
reference agency. You want to protect your credit history by avoiding defaulting on a
family if you can. They probably would like confirmation that you are coping away
loan (not repaying it). If you ignore your creditors, you could end up in court; and you
from home and will be reassured to learn that you are facing up to your financial
will certainly end up in a mess.
Remember when trying to negotiate with creditors it is best if you discuss your financial
Student Loans Company
situation with them, so you can mutually agree on an amount which you can afford to
If your own or your parents’/spouse’s financial position changes significantly during the course of the year, you should let the
repay them each month. An example of the sort of letter you could write:
Student Loans Company know immediately.
Your bank or building society
As mentioned earlier, it is sensible to contact your
Creditor’s name and address
bank immediately when you begin to struggle so that
problems can be resolved. Whatever you do, do not ignore any letters/emails/phone calls from your bank and go overdrawn without authorisation. This will only push up your interest charges sharply and turn what would have been an easily soluble problem into something much more difficult to resolve and more stressful.
Your creditors If you owe money to anyone else and your circumstances change, contact them immediately. People cannot be sympathetic to your cause if you don’t tell them what
Re: (your account number) I am writing to you because I am beginning to struggle to manage my finances. I am currently a student at ............ and my course finishes in (enter date). I wonder if we can arrange a meeting to discuss my financial requirements, looking at my income and expenditure together. By doing so, we can agree on the amount I can afford to repay you each month until I finish my course. Once I gain full time employment, I will obviously pay the full balance as quickly as I can. Thank you for your attention Yours faithfully (Signed)
the problem is. The more reliable you are in communicating with your creditors the more willing they are likely to be in trying to help. By telling creditors straightaway when difficulties occur, they can see that you are:
Your friends At all universities and colleges there will be some people who have more money than
• Being honest.
others. This is inevitable. Try to ration your spending so that you at least have a little
• Wanting to tackle your problems.
left over for socialising. This, after all, is a key part of student life. However, it is not
• Trying to plan ahead as best you can.
normally advisable to borrow money for more than the odd drink. This puts pressure
Creditors will not just go away. By not keeping them informed and ignoring their letters,
on friendships and can lead to guilt and more worry for you.
you will only make them more irate and far less likely to compromise with you or make
Your student union welfare officer/student advice centre
an effort to understand your situation.
With the vast majority of full-time students now having to take out loans, any problems that you are facing will not be new to them. All welfare officers should be able to give sound and reassuring advice. 26
• Fresh fruit and vegetables that need washing and cutting are much cheaper than
Advice agencies If, however, you would like free, independent and confidential advice you can either ring the Consumer Credit Counselling Service (0800 138 1111) or go online at www.cccs.co.uk/debtremedy Or you can visit your local
Money saving ideas
prepared or frozen items. • Avoid prepared ‘instant meals’ as you are paying for someone else to prepare them. • Buy ‘own brand’ products which are often cheaper but just as good.
Citizens Advice Bureau. Both of these charities will
• Take advantage of all the money-off coupons you can. If you usually shop at one
be able to supply you with self-help material as
supermarket take advantage of any ‘reward card’ they provide which turns ‘points’
well as giving you sound advice.
into cash vouchers. • Visit supermarkets at the end of the day, when fresh food is often marked down
Food shopping Food is an essential part of your budget and is
likely to be the most flexible part of it. As a result, when you’re overspending it is usually the food budget that you cut first. But this is not something that is advisable. You must make sure that you have a healthy,
Other ideas Below are just a few more ideas that can help your money go further. They may not work for everyone but why not think about them.
balanced diet. The following ideas should help:
• Plan your menu a week ahead and buy foods accordingly.
• Keep your budget up to date and keep looking for ways to make the most of your
• Where possible, combine your shopping with a housemate, buying to cook for two is usually cheaper than cooking for one. • Remember packed lunches work out much cheaper than buying sandwiches or
income and cutting down spending. • Keep receipts and guarantees in case things go wrong. • Keep a record of what you spend and check this against your bank statement. • Talk to your friends and family – often people have quite inventive ways of saving
eating out. • Always use a shopping list with items for your planned menu – and stick to it! Of course, you can treat yourself from time to time, but most of the time you need to stick to a list. • When you get to the supermarket, immediately check out the ‘reduced item’ shelves (usually at the end of an aisle) to see if there is anything you could use.
pennies. Shopping Tips • Only pay with cash. Paying in cash helps you keep a better track of what you’re spending.
• Keep a running total as you shop and check against the till receipt – mistakes do occur!
• As a general rule, don’t buy what you don’t need. When
• Watch the ‘sell by’ dates as you shop. You do not want to throw away food which
you are thinking of buying something, ask yourself if
you bought cheaply but cannot use in time. In the UK we throw away a third of all
you need it or want it. Try waiting a few days before
the food we buy. This is both costly and a ridiculous waste.
buying anything (particularly expensive items) – that
• Take advantage of discounts for buying in bulk – but only when you are sure you will be able to use the items. Tinned goods, cereal, toiletries and frozen goods (as long as you can store them!) are ideal things to buy in bulk. • Prices of many fresh products such as fruit and vegetables vary during the year so include items when they are cheap and avoid them when they are not. • Buying fresh vegetables from the local market or greengrocer usually works out cheaper than buying them from the supermarket.
should test how much you need it. • Shop around for the best price. If you are thinking of using credit, remember to compare the APR as well as prices. • Don’t feel under pressure to make a purchase when in a shop – it is always your right to walk away! • Shop in sales whenever possible.
Vacation Jobs: If you are a full-time student working only during vacation periods and
• Buy good quality things, but do not pay over the odds just for a label.
you think you will earn less than your personal allowance, you should inform your
• Restaurants and fast food shops are more expensive than eating in.
employer and ask for a P38(S) form. Once you have filled in your part of the form,
• Take bottled water or squash when playing sports, going to the gym or attending
return it to your employer, who will complete it and send it to your tax office. Your
lectures. Buying drinks when you are out can quickly become costly. • When using a washing machine or oven and so on, try and fill them to save energy costs. Remember to turn off appliances when they are not in use. A TV on standby uses 90% of the energy needed to run it. • Can you make gifts for people? You will save money and a home-made card, scarf or photo frame can be more meaningful.
employer should then pay you without deducting any tax. If you think you will earn more than your personal allowance, you should pay tax in the normal way. Term-time jobs. If you work during term, you will have to pay tax in the same way as people not at university, even if you think your total earnings for the year will not be
• Return library books and rented DVDs on time to avoid fines which can mount up
more than the personal allowance. The HMRC (formerly the Inland Revenue) will,
quickly. Your library may be able to loan you DVDs which will usually be cheaper
however, send you a form P91 which you should fill in and return so that the HMRC can
than borrowing from a video/DVD rental store.
check that your employer is deducting your tax correctly.
Offers and Discounts
If you pay tax and it later turns out you didn’t need to because in the end you didn’t
• Have your NUS card handy since it gives you discounts on many things.
earn more than the personal allowance you can claim back the tax by applying to your
• Websites like www.studentbeans.com and www.moneysavingexpert.com have
local tax office (your employer should have the address). The student section of the
great money saving ideas and offers for students. • The ISIC card (International Student Identity Card) can often get you money off flights and other travel and can be used to obtain student discounts abroad. • The Young Persons RailCard can save you substantial discounts on tickets and the
HMRC website includes a calculator to work out the amount you can expect to receive back. Check the HMRC website www.studenttaxadvice. org.uk for more information.
initial cost of the card can usually be recovered after only one or two trips. • Try and buy your course books second-hand from other students or visit
Amazon.com where you can buy and sell used books.
Tel: 0207 922 7800
www.brightsideuniaid.org Most students have jobs, some during term and some only during vacations. There are different tax arrangements for each, which are explained below. As a general rule, if the amount you earn during a
tax year is less than the personal allowance*, you should not pay any tax. If you do, you can claim it back.
Citizens Advice Details of local offices and their telephone numbers are provided on the website. www.citizensadvice.org.uk Consumer Credit Counselling Service Tel: 0800 138 1111 www.cccs.co.uk Credit Action
Students who earn over £139 per week will pay national
6th Floor, Lynton House, 7-12 Tavistock Square, London WC1H 9LT
Tel: 0207 380 3390
* Everyone is allowed to earn a certain amount before they pay tax and
this is the personal allowance. In 2012/13 it is set at £8,105.
Remember you can download the Spendometer for free at www.spendometer.co.uk
Directgov Provides easy-to-understand information on where government services and legislation impact on university life including housing, funding and tax. www.direct.gov.uk/uni Educational Grants Advisory Service c/o Family Welfare Association 501-505 Kingsland Road, London E8 4AU Student Advice Line Tel: 020 7241 7459 (available Tues, Wed and Thurs 2-4pm) www.direct.gov.uk/en/Dl1/Directories/DG_10011032 Independent Taskforce on Student Finance Information www.studentfinance2012.com or the mobile website www.unifees2012.com Remember to download the Uni Fees 2012 app
Do… • Ensure you know how the student loan system works.
Dos and don’ts
• Try to have some savings in case your loan is delayed. • Budget! Use the Spendometer to help you. • Keep a record of what you spend and where you spend it. • Have a list of priority spending – differentiating between needs and wants. • Take advantage of your bank’s free banking facilities. • If they require a response then reply quickly to letters from your bank, building society or any creditors and keep a copy of all correspondence. • Be aware that if things go wrong financially, it can affect you emotionally and seriously distract you from your studies.
National Association of Student Money Advisers (NASMA) www.nasma.org.uk National Union of Students 4th Floor, 184 -192 Drummond Street, London NW1 3HP Tel: 0845 5210 262 www.nus.org.uk
• Seek advice speedily. The longer you leave a problem the harder it will be to sort it out. Talk to family, student welfare officers, bank staff etc. • Allow some money for recreation and pleasure.
Don’t… • Overspend at the beginning of your first
Student Awards Agency for Scotland Tel: 0300 555 0505 www.saas.gov.uk
term. Remember your money has to see you through the year. • Spend more than you can afford when
Student Beans – Discounts for students www.studentbeans.com Student Loans Company Tel: 0845 300 5090 www.direct.gov.uk/studentfinance
going out. Leave your cash card at home! • Buy non-essentials when struggling to pay for essentials. • Ignore signs that spending is getting out of control. • Guess at what you are spending. • Be afraid to talk to someone and seek advice if you are having problems financially.
Student Finance Northern Ireland Tel: 0845 600 0662 www.studentfinanceni.co.uk
• Cut yourself off from family and friends if things get tough. • Make rash promises to pay when you know that you can’t. • Exceed your overdraft limit without previous authorisation.
Student Finance Wales Tel: 0845 602 8845 www.studentfinancewales.co.uk
Unauthorised overdraft rates are very high when compared with what is offered if you stick within agreed limits.
Student Loans Company Limited 100 Bothwell Street, Glasgow G2 7JD Tel: 0845 026 2019 www.slc.co.uk
• Get paranoid! Remember, even if you are struggling, you can approach your bank or building society with confidence. 32
We very much hope that this booklet will help you handle your money sensibly and enable you to find ways of making your money go further. Do not hesitate to get in touch with
Credit Action or our sister charity the Consumer Credit Counselling Service (CCCS) if the need arises. You can phone the free CCCS helpline on 0800 138 1111 or go online to use their free debt counselling tool www.cccs.co.uk/debtremedy For further hints and tips and tools to help you manage your money, visit the Credit Action website www.creditaction.org.uk Whatever your financial circumstances – rolling in cash or desperately stuffing your hand down the back of the sofa – keep in touch with your bank or building society. Don’t forget, many of the banks’ staff were once college students, others may well have children at university and they know only too well the problems you are facing. You will be surprised at just how helpful they can be. Everyone at Credit Action and the Consumer Credit Counselling Service wishes you an enjoyable, successful and worry-free time as a student.