Starting university or college life is exciting and challenging but for students getting to grips with managing their finances for the first time it can also be daunting.
Parents can help by teaching their children how to manage a budget.
How to prepare your son or daughter for student life:
If your son or daughter plans to go to university or college, you may be worried about how they’ll cope without you (or you, without them)! This important time can be made a little less stressful with a few tips on budgeting and borrowing. Remember that loans and funding are often paid to students at the start of each term and can seem like a lot of money. But making the cash last across the year can be hard and needs careful planning.
Depending on which part of the UK they are studying in and where you live, your son or daughter can use student loans to pay their tuition fees and/or some of their living costs. Yet this may not be enough to cover everything. Other funding such as grants and bursaries may be available. They do not have to repay grants or bursaries but eligibility for them will depend on your circumstances and theirs.
For more information relevant to your own child visit Student Finance England on the Gov.uk website. If your child plans to study in Scotland visit Student Awards Agency for Scotland website; for Wales visit Student Finance Wales website; and for Northern Ireland, Student Finance NI website.
Before students start university or college, parents’ income and circumstances will have been assessed to decide whether and how much you should contribute towards their living costs. A useful budget planner from the Money Advice Service will help students work out where their money is going and where savings can be made.
Students may be thinking of taking part-time work while studying to help fill in any gaps in their funding. Parents should try to help their children realise the importance of a reasonable balance between work and study - and down time! Too many hours of part-time work (20 hours a week or more) have been shown to have a detrimental effect on studies. Talk to them about whether they plan to work during term time or in the holidays and encourage them to start looking as soon as possible - there is bound to be a lot of competition for the best part-time jobs. Advice on working and paying tax is available from the Money Advice Service.
Students can save money by using the discounts they are entitled to. A little bit of research will save pounds and help stretch the budget. The 16-25 Railcard offers valuable savings on rail travel. In addition some bus companies offer travel cards and some universities and colleges run free student bus services. Apply for a National Union of Students (NUS) card and use it to make savings at on food, books and clothes at high street stores, and in pubs, cafes and entertainment venues. All ID cards will need photos so it might be worth having a batch done in advance.
If students are moving into halls of residence they shouldn’t have too many bills to pay, as these will mostly be included in their rent. However, if they are sharing a house with other students, they’ll need to get to grips with their own bills for utilities. They will need a TV licence - even in halls of residence if they have a TV in their room - and they will need one whether they’re watching programmes on a TV set or live on another device. Students in shared accommodation will have to work out the best way to pay regular bills such as gas, electricity, water and the TV licence (bills are a potential source of conflict between roommates!).
Remember, it’s in the interest of businesses to make paying bills as easy as possible for their customers. Depending on cost and convenience, ways to pay include: direct debit, by phone, by internet banking or at the local Post Office. Try to have a conversation about paying the bills at the start of term and try to stick to any arrangement that has been made with your house-mates. More information is available from the Money Advice Service.
Insurance for personal belongings:
It is vital that students’ belongings are covered by insurance. Parents may in certain circumstances be able to extend their own home contents policy to cover their children’s belongings. Otherwise students should be encouraged to shop around and make sure they get enough cover for any expensive items such as laptops, tablets, bikes, mobile phones or musical instruments. Student Unions often have information about insurance companies that have products to suit students’ needs. And some student halls of residence include contents insurance in their costs – it always pays for your son or daughter to check.
Students going to university for the first time will be eligible for a tuition fee loan to cover the cost. Fees can vary quite a bit from place to place, even for similar courses, so students should do their research before applying. In England the current maximum yearly fee for higher education is £9,000. The tuition fees are paid directly to the college or university.
Students do not start paying the tuition fee loans until after the course is finished and only when earnings reach a certain level. Full-time UK applicants may be eligible for extra assistance in the form of maintenance loans or grants to help with living costs. These can be applied for at the same time as tuition fee loans.
Maintenance loans - these have to be paid back later. Students are awarded money at the start of each term (or monthly in Scotland). The amount varies, depending on household income, and can be used for accommodation, books, food and travel.
Maintenance grants don’t have to be paid back and are available for students from low income households. They are paid at the same time as maintenance loans.
Getting help with debt:
Even though debt is a fact of life for many students it can still cause worry and stress, particularly if they feel it is becoming unmanageable. Parents should emphasise that it is
important to get help or advice as soon as debt begins to become a problem. Most universities and colleges will have a student money adviser who can help. They will be able to tell students about any funds that might be available such as a hardship loan or fund. They can also help them talk to the students’ creditors and create a budget. Most of all, students should not ignore problems and suffer in silence. Help is available.
Useful phone numbers:
• Student Finance England has information on all aspects of student finance, loans and how to apply for them and other sources of financial help. Phone 0300 100 0607 or visit www.gov.uk or www.ucas.com
• The Money Advice Service offers free and impartial advice on www.moneyadviceservice.org.uk or call 0300 500 5000.
• The National Debtline is on www.nationaldebtline.org or call 0808 808 4000.
• The Student Loans Company is on 0300 100 0601.