A huge worry for a lot of potential or current students is debt and leaves many students asking, is a degree worth the debt? And with the price of tuition fees being as high as £9,000 at the moment it’s no wonder students are anxious! If you’re wondering ‘will university give you lots of debt?’, read our information below to understand what debt is and how it can affect so many students.
Firstly, student debt, from the likes of student loans, grants and tuition fees is very different from other debt such as credit cards, overdrafts or standard loans. Student debt is either owed to the institution or a company and in the UK it is the Student Loans company or their partner companies sin Scotland, Ireland and Wales.
General student debt is made up of your tuition fees which are the cost of actually attending the degree course at university, student loans, which are loan supplements to help students with living costs whilst studying, which leads to a number of discussions regarding the real cost of university. Grants or bursaries are free, meaning if you are entitled to them you won’t have to pay them back. There are usually means–tested which is when the company or university see how much your parents or household earns and offer you extra help if you are on a low income. Therefore student debt is usually made up of tuition fees and student loans together, and in the UK, are paid back when you start earning a specific amount. If you attended university when tuition fees were no more than £3,000 then you will have to start repaying your loans when you earn £15,000 or more. If you attend(ed) university when your tuition is as high as £9,000 then your repayments will begin when you earn £21,000 or more. Therefore, it doesn’t matter if your tuition fees are higher, the repayments are relative.
However, students can get into different kinds of debt during their time studying. As university timetables can be demanding, with coursework and exam stress as well as general lessons, finding a job that suits your lifestyle can be tough and living isn’t that cheap either! Some students may enter their overdraft or apply for a student credit card to help their financial budget whilst studying. If this is the case then always read all the information provided, including the small print! Never sign up to something that you full well know you won’t be able to pay back or can’t afford, or don’t understand. If you’re unsure then speak to someone you trust and who you know does understand, like a family member.
The other means of financials support, such as credit cards or overdrafts can cost you a lot – the interest can be as high as 40%. This means, if you borrow £100 in a year you will pay back £140, which is nearly half the amount of borrowed on top! Search for student friendly help, such as student overdrafts where you don’t have to pay overdraft charges during your studies, or student credit cards that have low-interest rates or even 0% interest for a certain amount of time.
If you do borrow, always make a plan where you know you can pay back what you owe and stick to it. Always plan for emergencies and if you’re unable to make a payment, do you have someone that can help you out? If you ever do come across a time when you can’t make a payment, it’s good to have a back-up.
Family or friends are always cheaper than credit cards, overdrafts or student loans. If you are having money troubles speak to your nearest and dearest first because they won’t charge you interest! You’ll end up paying back a lot less without the charges and know that you’re in safe hands and not in something too deep that you don’t fully understand. Be aware of borrowing from your class or housemates as they will have a strict budget like yourself, and if you’re unable to pay them back straight away you might affect their finances too.
Universities are there to help students in all areas and that includes financially, if you’re worried about debt or think you’ve entered an uncertain situation financially, then you can speak to someone who can help. Most universities will offer advice on what to do and how to change your spending to help your budget, and in other cases can offer financial help with bursaries or one-off payments.
Therefore, university doesn’t necessarily give you lots of debt – which can be the perception! It will give you student debt, which is a little different to ‘general’ or ‘personal’ debt and the repayments are generally a lot lower than you think they are, and you’ll probably won’t even notice you’re paying them! In most cases, the debt which students find themselves in is due to them not understanding finance agreements they’re signing up to, or spend too much on things that they can’t afford, including, nights out and luxuries.
If you are worried about your financial situation whilst at university, you can speak to the finance department at your university or college, or set up a budget planner and learn even more about how to deal with your student loan to ensure you stay on the right track. If you do get into financial trouble, seek help from people you trust first and never sign up to loans, payday loans online or credit cards without thinking them through or setting up a payment plan you can actually stick to.
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