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Student money problems are not uncommon. It’s far too easy to make mistakes with your money while focusing on having fun and making the most out of the university experience. That’s before we even start to think about funding our lives and the huge debt (gulp) that comes afterwards.
Here are six scary student money situations and how to deal with them. Don’t panic if you run into one of these terrifying money moments – there’s always a way out.
The most common money problem students run into is spending most, or all, of their maintenance loan nearly as soon as it comes in. This happens for a number of reasons: accommodation costs, textbooks, buying lots of things to set up your room and kitchen, the madness of Freshers Week. Often, not being used to making a large amount of money stretch for several months plays a factor too.
So what if this happens? The first thing you need to do is drastically cut down on your spending. Find out where your money has been going. If it’s on clothes or tech, see if you can return them. If you’ve been overdoing it on nights out, find a cheaper way of socialising, at least for a while.
Next, you need to find some money to live on until your next loan instalment comes in. If you feel comfortable borrowing from friends or family members, do it, and pay them back when you can. A part-time job will bring some income in too.
Contact your bank, as you may be able to temporarily extend your overdraft to give you some breathing space. Your university should offer hardship funds if you have no other options, so contact your student union or talk to your personal tutor.
One thing you must NEVER do, no matter how tempting, is take out a payday loan. They will give you cash quickly, but at a staggering cost, and with no real income you have no hope of paying it off. You could become sucked into a cycle of ever-increasing debt, and it really isn’t worth it.
Finally, prevent it happening again – draw up a budget and stick to it. Write down everything you have to spend money on, including your rent, phone contract, energy bills, food shopping, eating out, socialising and transport. Once it’s on paper, compare it to your income: your student loan, help from family and any money from jobs. Draw up a spreadsheet if it helps. Look at where you can cut back, allocate funds to various categories, and work hard at living within your means. You can do it!
Student Finance is far from infallible, and if you’re unlucky your maintenance loan may be delayed. This can have a serious impact.
First, check that you remembered to reapply and that your application was received. Make sure you’ve officially re-enrolled at university, as this could be causing the delay.
Call Student Finance, with your reference number ready, and find out if your loan is on its way. Write down when you’ve phoned, so you can refer to it again, and you can sort out the problem. If it really is a late payment, all you can do is sit tight and wait, or try some of the advice in our last point to tide you over.
If your delayed payment is affecting your tuition fees or university accommodation rent, speak to your university. They understand that sometimes delays happen – provide evidence of the delayed payment, if you can, and arrange to delay your fee payments.
This might be the first time you’ve ever had to manage your money to this extent. It’s a huge responsibility and if you can’t tell your ISA from your elbow, now is the time to learn.
You could get yourself in trouble if you don’t understand the rules of your overdraft, how a credit score works or why your choice of student account matters. The National Association of Student Money Advisers has a list of useful links to help you out.
You could also visit the Student Services centre at your uni. They’re equipped with all sorts of tools and information to help you understand student finance. You might find they even run workshops to help you budget and learn more about managing your money.
You may have got a credit card to help you meet costs, but it is a very bad idea when you have no proper income.
Common risks include getting caught in a debt trap and only being able to pay off your interest while making little impact on the debt itself. You might fail to pay on time because you need your student loan for other things. You might even end up relying on it so heavily the company extends your limit so you can spend even more. This is not a good thing!
The best way to avoid this kind of debt is to resist the temptation in the first place. If you do find yourself in trouble, focus on paying this debt off first. Cut back on everything you can afford to, ask family for help, and look at ways to make more money to tackle the loan.
Hidden course costs are the sneakiest and most common drain on your finances. Buying materials and resources for your course is a student money problem that can be avoided if you plan ahead.
A classic mistake made by too many students is to head straight to the bookshop and buy all their course books brand new. As academic books can cost anything from £20-£100 or even more, this is an avoidable mistake that could land you in debt. Borrow books from the library, or scour secondhand book sites like Alibris and AbeBooks, and keep an eye out for sales at your uni.
When the year comes to an end, you can sell these on again to raise cash for next year’s books.
If you’re happy to read on a screen instead of from a textbook, look for electronic versions, too. You can read PDFs on any smartphone or laptop, but it might be a wise investment to get a basic eBook reader to store everything on – a Kindle costs as little as £69.99 and eBooks are often much cheaper or even free to download.
Remember, too, that audiobooks can be a useful investment – particularly for supplementary texts rather than core books you must read. Use a service like Audible, Spotify, or iTunes to find the books you can download. It’s a great way to cram more studying into your day, too – you can listen while you’re walking to and from campus, or waiting for your laundry to be done!
We’ve all been there – waking up the morning after the night before and discovering an empty space in our bank account where cash should be. Once you’ve had a few drinks your inhibitions vanish and suddenly the best idea ever is to keep buying shots. Sore head, sore bank account. Oops.
Stop this happening in the first place by only taking out the amount of cash you plan to spend (including taxi/bus money). Hide an emergency tenner and your bank card in a different pocket or section of your wallet or bag. And limit your nights out for a while until you recoup the costs!