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UK Student debt guide

Becoming a student could be the first time in your life that you have had to deal with money entirely on your own. This kind of responsibility can be daunting, but it does not have to be a struggle.

Here is a quick guide to how you can manage your finances and stay out of debt as a student - or at least minimise the amount of debt you take on.

Types of student debt

First of all, it is important that you understand the different types of student debt and how they could affect you.

Nearly all students in the UK receive a student loan from the government. You should not worry too much about the short-term effects of this student debt, especially during your studies: student loans are only repaid once you have graduated and are earning above a certain amount (£15,000 a year for those who started university between 1998 and 2010, and £21,000 a year for people who start after then).

However, you should be more concerned (in the short term) about other forms of debt. Many student bank accounts offer interest-free overdrafts until your studies have finished, but do remember that this will have to be paid back at some point, and your bank could start charging interest as soon as you graduate.

Other forms of credit, such as loans and credit cards, should ideally be avoided completely during your studies: repayments are normally required every month, and this could be very difficult to manage on a students income.

Managing your finances as a student

So how do you go about staying out of debt as a student? By budgeting carefully, you can make it easier to cover all your costs, and you will also know how much you can safely spend on other things.

Calculating a student budget

Working out your budget is easy. However, because of the way your studies are financed, working out a student budget can take a few more steps than it would for the average person.

1. At the start of the term, work out any one-off costs you have to pay (e.g. rent, tuition fees, books). Now deduct these from your total income (i.e. student loan, money from parents and any other money you have to spend).

2. Divide the remaining money by the number of weeks in that term. For example, if you have £750 left and your term is 10 weeks long, you will have £75 a week to spend.

3. Now work out your week-by-week budget. Plan how much you will need to spend on food, laundry, travel and anything else you can think of. So if your typical food costs come to £25 a week, laundry comes to £10 and travel costs £20, your overall weekly costs would come to £55.

Now deduct this from your weekly spending money - so £75 minus £55 is £20. This money can be spent as you wish.

Getting help

This website has loads of information on setting up a budget to stay out of debt , and other calculators and tools to help.

Not everyone will follow the above advice, and some people wonot realise they have a problem until they are already deep into debt. But it is never too late to get help.

If you think you are struggling, do not hesitate to contact a debt adviser. They can help you find the best way of tackling your debts and getting back on top of your finances.

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