FOR thousands of school-leavers across Scotland, Tuesday heralds the beginning of a new life. Nerves give way to excitement for the successful ones confirming their university places but, for all except a lucky few, the next big challenge is working out how they can actually pay for student life.
Of course, those studying north of the Border don't have tuition fees to worry about. However, the costs are still eye-watering, particularly for those leaving home, and the prevailing economic environment adds to the difficulties.
A quarter of s
tudents believe they will be still be repaying student debts in 15 years, according to the Association of Investment Companies (AIC), which said students starting university this year can expect to graduate with around £20,000 of debt.
The financial burden deters thousands every year from continuing their education, but there are ways of ensuring that going to university doesn't have to followed by years of paying off the debts it brings.
The biggest expense is accommodation. The most obvious way of avoiding or limiting the costs is to stay at home, the option now taken by about a quarter of students, according to Lloyds TSB research.
The bank found that 42 per cent of Scottish students said they couldn't afford to attend university without the option of staying at home, compared with a UK average of 33 per cent.
Whether you stay at home or fly the nest, finding the most suitable bank account is crucial if you want to graduate with a degree of financial freedom.
Eleven banks offer accounts targeted at students, with the main feature being interest-free overdrafts. "A handful of lucky students will be interested in the credit rate of interest, but for most it will be the overdraft facility which is the overriding factor," said Michelle Slade, an analyst at Moneyfacts.
For students who meet its criteria, Halifax offers the highest facility, at £3,000 from the word go, while most others start at £1,000 in the first year, typically reaching £2,750 after four or five years. Some of the freebies offered by banks seem enticing, but don't be lured into taking an unsuitable account. Cinema tickets, free downloads and railcards are all on offer, but incentives shouldn't be the basis on which an account is chosen. As Slade adds: "Once equipped with an NUS card, you will have access to numerous student discounts."
Look instead at overdraft limits, unauthorised overdraft charges, convenience and customer service. Charges for exceeding overdraft limits will be levied on most students at some point, so they should be a key consideration. They vary hugely: some banks charge only the interest on the unauthorised overdraft, while others, such as Halifax and Abbey, levy fees up to £28 a month on top of the interest.
Some are fortunate enough to be interested in the rate paid for staying in credit, but there's not much on offer here from the main student accounts.
The majority pay just 0.1 per cent (gross) a year, although Halifax and RBS pay 2 per cent gross. Yorkshire Building Society and Clydesdale Bank pay 2.90 per cent, but the best available is 3 per cent, from Smile.
Finally, find out what happens to your student account when you graduate. Some revert back to the bank or building society's current account immediately, but others become graduate accounts, which can be more helpful if, like most graduates, you are overdrawn and in debt.
TOP FIVE TIPS
1 DON'T BE SWAYED BY INCENTIVES:
The most eye-catching gifts, such as free cash and iPods, can mask uncompetitive accounts.
2 BUDGET:
Keep a note of your outgoings and set a realistic weekly spending limit.
3 CHOOSE THE RIGHT ACCOUNT:
A high interest-free overdraft limit will be useful to most, while luckier ones might look at in-credit interest rates.
4 MAKE IT LAST:
When your loan has to last you three months or more, going to your parents, begging bowl in hand, for help halfway through term is no fun.
Work out a plan of making what money you do have last – and stick to it.
5 BE WARY OF CREDIT:
Credit cards can seem like a get-out-of-jail-free card, but before the repayments build up and you're stuck with debts that you can't pay off, seek advice and talk to your bank.
CASE STUDY
BANKING on valuable work experience
Working at Royal Bank of Scotland in her spare time has not only helped Ailie Wallace, 22, to fund her studies, but provided a useful perspective on money management.
Next month, Ailie starts the third year of her history degree at Glasgow University, but to make it this far she's had to be astute financially.
"After two years at St Andrews University, I left and worked full-time for a year. But the break meant I was only given £500 towards my annual tuition fees when I started at Glasgow," Ailie explained. A combination of help from her mother and flexible work at RBS has helped.
But Ailie was unable to avoid slipping into the red and has had to take advantage of the interest-free overdraft that she gets with her RBS student account.
"I was reluctant to get an overdraft, but I couldn't have lived without it. I'm hoping to pay as much off as possible before term starts as I'll need to use it again. I've been able to open a savings account as well."
It's no surprise that Ailie has some good tips on how to survive university on an income that can disappear with alarming speed: "I'm not the best at budgeting, but once you get your student loan, work out what you need for rent and put that money in a separate account with a standing order.
"Then you know what you have left to spend and how to spread that out over the months. Also avoid credit cards, because you get in enough debt anyway when you're a student."
The full article contains 1010 words and appears in The Scotsman newspaper.
