‘Freshers' resigned to graduating over £39k in debt
First year ‘fresher' university students expect to graduate more than £39,000 in debt, according to research from the Money Advice Service. With such expected levels of debt, 30% of freshers said they would consider living at home whilst attending university in order to avoid going too far into the red.
The figure, which only represents debts run up during their time at university, is double that expected by the previous years' intakes.
Overall, other university students (non-first years) anticipate they'll finally leave with debts of around £20,000. However, with careful money management and good planning, it is possible to control the debt says the Money Advice Service, which aims to help students make the most of their money.
The research, conducted by YouGov among 1,434 UK students and recent graduates aged 18 to 24 years old, on behalf of the Money Advice Service provides a detailed picture of student money matters and their ‘debt mix'.
Students are turning to a variety of financial sources to help cover the costs of studying:
The most common debt taken on during their university years is a student loan, with (80%) of students and graduates questioned having taken out at least one loan.
A quarter (25%) are currently borrowing money from parents or grandparents,
Over a third (34%) are accumulating overdrafts; and
More than one in ten (14%) are using credit cards.
Despite the common use of loans and credit, the majority (55%) of students are worried about the levels of debt they will run-up by the time they leave university. Furthermore a third (32%) of graduates surveyed said they wish they had managed their money more carefully while studying.
University is often the first experience many young people have of making everyday financial decisions and budgeting for themselves. The Money Advice Service has a range of tools to help.
Despite inexperience and concerns about getting into debt, over half (58%) of those students questioned claim they have never received any advice on managing their finances while at university.
In response to the expense of going to university, students are considering a range of tactics in a bid to save cash. Three out of ten students (29%) would consider skipping meals, (31%) would switch off the central heating or (27%) go without buying course textbooks in order to help minimise their student debt. Whilst very few students admitted using Pawn Brokers, a quarter (23%) would consider trying to sell off valuable items to raise money if they had to.
In addition to cost cutting, students are juggling part-time jobs with university life to keep debts under control. Almost two-thirds (60%) of students surveyed said that they work at some point during the year and over a quarter (27%) will work both during term time and the holidays to boost their finances.
Commenting on the findings, Karen Broughton, a director at the Monday Advice Service said: "Debt is now a normal part of university life, but with careful management it needn't be a worry for current or prospective students. Whether living at home or moving away to study, students have to make major choices about budgeting and banking. It's vital to get the right advice before taking on debt and make plans to get a grip on money matters. Otherwise uncontrollable debts can become very expensive to pay off long after graduation.
"To maximise their income as much as possible, we urge students to take advantage of the handy tools on our website - such as budget planners and calculators like our Money Stretcher and Cutback Calculator which can quickly highlight where you can make everyday savings."
Commenting on the research, Phil Davis, Chairperson, at the National Association of Student Money Advisers (NASMA), said:
"It's really important that students are fully aware of all options for funding available to them, including student loans, to ensure they maximise their income during study. Funding from the Student Loans Company is preferable to other forms of credit because of the flexible repayment terms, which take account of personal circumstances.
"Maximising income is important, but it is equally important for students to develop their financial capability - many universities offer confidential money advice which can range from budgeting tips, to managing debts. The earlier students seek assistance with any financial issues, the more likely an effective strategy can be identified. Students can find out if their university has advisers with NASMA membership by visiting nasma.org.uk."