Financial advice for new students

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By Mark Mitchell
Know Your Money Editor

Sixth-form students need a greater level of advice and guidance when considering options for their future, it has been suggested.

A recent survey by Push found students who started university last year can expect to owe approximately £23,200 by the time they leave higher education and prospective new students are expected to owe around £1,500 more than that.

The report discovered that student debt has risen by 5.4 per cent to £5,600 for each year of study, with students in England racking up an average debt of £5,293 per year.

This was even greater in Wales as students totalled an average debt of £6,411.

In Scotland, where home students pay a much reduced fee but tend to study for four years, the average was £2,637.

Figures that may not be made immediately obvious to young people dreaming about a life at university.

Raised awareness needed?

Findings revealed as part of the Association of Investment Companies annual survey into attitudes towards student debt indicated a number of young people and their families are already aware - to some extent - about the financial side of university.

It indicated that 82 per cent of parents admitted the recession has increased the financial strain of university costs.

It also revealed 55 per cent of students are worried they will not find a job on graduation and 49 nine per cent of students think it will take over a decade to repay their student debt.

In addition to this, it was found that 32 per cent of students will take a higher paid job over their career vocation to pay off their debt.

Tanya de Grunwald, founder of career advice website GraduateFog.co.uk said: "I meet students as they emerge from university - and it's usually only then that they truly appreciate the scale of their debt. Many just didn't think about it when they enrolled for their degree.

"I definitely expect to see this changing in the next couple of years - and I hope we will see prospective students being given better advice when considering their options during sixth form."

She added it is necessary for students to understand the financial implications of enrolling for a degree because it is their money and they will be the ones who have to eventually pay back this debt.

Students encouraged to be pro-active

Students have been encouraged to be pro-active about their finances in order to stretch their money further and potentially minimise the amount of debt they get themselves into.

This follows the recent NatWest Student Living Index, which indicated that hard-working and resourceful London students are earning, on average, £5,000 per year.

This sum totals almost £170 per week towards living costs.

The research, carried out among students in 25 university towns and cities in the UK, showed the average student in the capital spends £205.25 per week on living costs and rent, but manages to offset some of these expenses through working on a part-time basis.

In terms of money saving, this could be a wise move as it would mean to make ends meet they only have to find just under £40 a week from elsewhere.

Second in the table of top saving students was Dundee, followed by Manchester, Plymouth and Glasgow.

However, students in York may wish to consider their options as for the second year running they were found to be the least cost-effective of those surveyed, as the average student earns just over £70 per week - less than half of the weekly wage of those studying in London.

What is the advice?

Tom Adamson, head of NatWest Student and Graduate Banking, encouraged students to take control on their cash by budgeting for their outgoings effectively, in order to make the most of their time at university.

He added: "There are lots of student bank accounts out there and it is crucial that they look at each package and see what is best for them. Some of them have different offers to others."

To compare current accounts including student accounts head over to our current account comparison page here.

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