Your guide to student finance

By Marianne Curphey

Going to university is expensive, no doubt about that. In fact, according to the website for the Universities and Colleges Admissions Service (UCAS), it can cost up to £9,000 per year to study in England, Scotland, Wales or Northern Ireland. For most people, that is not an out-of-pocket expense. Loans are an obvious solution, but, often, they are not enough to cover all the expenses of being a student.

If you can get a grant or bursary, that's the best way to supplement your loan income. Credit cards, other loans or a student bank account overdraft can also help but should be used with caution.student-expenses

Student overdrafts
The most cost-effective way to borrow is through a student bank account, says Paul Crayston, who was a communications manager at the Money Advice Service (MAS) until 2014.

"Student account overdrafts tend to be interest-free," he says, "as do graduate bank accounts, which last for a couple of years after graduation."

Only about 2% of callers to National Debtline, a free debt charity linked to MAS, are students, he says. This is because while students are
at university, their debts are interest-free and do not have to be repaid, he says.

However, a few years after graduation, when the student accounts are converted into traditional accounts and student loan repayments start, young people begin to struggle with debt, he says.

"Of our callers seeking debt advice, 12% are in the 18 to 24 age group, but the percentage increases to 30% in the 25 to 35 age group," he says.

"Debt problems tend to hit people a few years after they have left university," he explains. "If they are living a credit-fuelled lifestyle and then they have to start repaying their borrowings, then that can hit them hard," he says. "Once the interest-free overdraft disappears, graduates find companies start to chase them for loan repayment."

Credit card borrowing
If you need more than your overdraft allowance, you could consider a credit card, as you may have up to 56 days of interest-free borrowing before you have to make a repayment. Several credit cards appropriate for students or young people with no credit history offer 0% interest for an introductory period of three months. But after that, the rate skyrockets.

"Generally I don't suggest students take out a credit card because if they can't afford to pay off the balance each month. It will soon mount up," says Andrew Hagger, director of MoneyComms.

Why can't you get those rock-bottom interest rates you see advertised? Credit card and loan companies offer their best rates to those with high credit scores. As a student, you may not have much of a credit history showing you can handle debt, or you may have a lower credit score.

Either way, it makes sense to decide on a sensible budget so you don't have to go into debt. It may be hard now, but heavy debt will be even more of a burden later. "It can be difficult if you are a few years out of university and you don't have an interest-free overdraft but you have not been able to find a job," says Paul Crayston, of MAS.

See related: You've finished school. Now how do you pay for it?, Your student credit card study guide

Updated: 13 August 2015