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Student finances -the guide

08th June 2012 12:02:03

For most students, university will be their first time managing their own finances.

Having to live on a budget can make life especially difficult, but if you’re prepared to spend a little time swotting up on money matters, it needn’t be as daunting as it seems.

Here, MoneySupermarket explains all you need to know about student finances and ensuring your money stretches as far as it possibly can….

Student accounts

The first thing you will need to consider is which student account to go for. While it might be tempting to opt for the account which comes with the best freebies, the size of the interest-free overdraft is likely to be much more important.

As a general rule, banks usually offered tiered overdrafts which increase in size as your course progresses. So, in year one, you might be able to borrow £1,000 interest-free, rising to £1,500 in year two and £2,000 in year three.

Bear in mind that most of the interest-free overdraft limits advertised are ‘up to’ limits, which means you aren’t guaranteed to get that amount.

Whichever student account you go for, remember that if you don’t keep tabs on your balance and drift into an unauthorised overdraft, in some cases you could see yourself being hit with interest rates nearing 29%.

Check your account regularly via online banking so you know where you stand, as the last thing you want is interest charges taking a bite out of what will already be a very tight budget.

Finally, always remember that your overdraft does have to be repaid eventually, and the rate you are charged will increase as soon as you graduate, so try to keep spending to a minimum wherever possible.


Set yourself a weekly allowance for food shopping and cash for going out and make an effort to keep within it. Draw out your allowance in cash each week and get into the mindset that once it’s gone that’s it until next week – it may seem hard at first but at least this way you won’t spend what you don’t have.

Always go shopping armed with a list, so that you are less tempted to make spontaneous purchases.

Take advantage of voucher codes and discounts wherever possible too, and use your NUS card to get money off when shopping – every penny counts.

Managing loans

All UK students starting university in September this year are entitled to a Tuition Fees loan of up to £9,000 from the government. This is not means tested but has to be repaid after the course ends.

Any Tuition Fee loan is paid direct to the university, so you won’t have to worry about handing over the money yourself.

Your Maintenance Loan, which is for living costs, will be paid to you and can be spent how you want.

It is worth up to £5,500 if you live away from home and are starting university this September, or £7,675 if you are living away from home in London. You will get £4,375 if you are living in your family home while you are a student.

Part of this loan is means tested, so the total amount you'll get will depend on your family income.

However, don’t be tempted to splurge when the money lands in your account – the last thing you want to happen is to end up saddled in debts because you blew the money in the first few weeks of term.

Instead, work out how much will need to go towards rent, and after that how much you will need for books, food, extra-curricular activities, and any other outgoings.

Keep your student loan money in a high-interest savings account, so that any money you aren’t using is earning you something.


Many students carry around expensive items such as laptops, iPhones, MP3 players and digital cameras every day so it’s vital to take out adequate insurance to protect belongings.

Although parents’ policies may offer cover for children studying away from home as standard, some policies will need to be extended to protect student possessions, while a notable minority of policies will not extend cover to students at all. 

Bear in mind that even where contents policies do offer cover, there is wide ranging variation in the level of protection that they provide, so you may be better off with specialist student cover.


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