The average student is expected to be more than £20,000 in debt after graduation. These debts will not be easy to pay off. As a full time university student you are entitled to receive an annual loan of £3225 to cover tuition fees and a further maintenance loan of up to £6900 to pay for living costs. £6900 may sound a lot of money. However, if you break this down into three terms of 11 weeks each, it is the equivalent around £200 per week to cover both accommodation and living costs. It is therefore important that you manage your money at university properly. Only then will you have a chance of keeping the debt you are left with to a minimum.

How to choose a student bank account

If you have not already chosen a student bank account, you will need to do this. Different banks will offer different incentives. I have mixed views about taking up an offer of an interest free overdraft. On the one hand, this is a good idea to give you a safety net if money gets tight. However, in my experience, if you know you have an overdraft facility available, you are extremely likely to use it to supplement your general living expenses. As such after graduating, your overdraft will almost certainly be outstanding as an addition to your total debt.

Manage your money at University with a monthly budget plan

If you want to live within your financial means, it is very important to use a monthly budget. This will identify your essential living expenses including things like rent (and bills and TV license if you are in a shared house), food, travel costs, your mobile and the cost of books and so on.

You can then subtract this total from your monthly maintenance budget to give yourself an idea of what you have left over to spend on socialising. Divide this into a weekly amount and then take that amount out of your account at the beginning of the week and stick to it.

If you have calculated your budget and find that you do not have enough funds, this is an indication that you will need to look for supplementary income from elsewhere perhaps from a part time job. If at all possible, my advice is to ignore all of offers of credit cards. A credit card is simply a temptation to spend money that you do not have and will add a significant debt burden once you graduate.

Paying back your student loan

The good news is that on graduation you will not have to start paying back your student loan until you are earning over £15,000. The repayments you make will be minimal (9% of what you earn over £15,000). The interest you pay on your loan is based on the retail price index which is currently in minus figures. As such, the student loan interest rate is currently set at 0. However this is sure to increase as the economy improves.

With everything you have to think about regarding student life from accommodation, social activities and even dare I say it, study, your financial situation may well not be at the forefront of your mind. However, as a student, unless you take your finances seriously, you may well end up burdened by significant debts when you graduate. If you are like any normal graduate, you will find this debt far more difficult to pay off than you first imagine.