How to stop university debt from spiraling out of control
The thought of university debt can be a daunting one. Leading fee free debt management provider, ClearStart, have shared their tips on keeping it to a minimum.
The cost of being a student is rising. Studying at university can cost into tens of thousands of pounds each year, when tuition fees and living costs are taken into account.
They say that university is as much about the life experience as the qualification that you’re earning. That life experience includes learning how to budget and minimise debt. How can you make sure that your university debt doesn’t spiral out of control?
1) Don’t rely on credit cards and overdrafts
You get into debt with tuition fee loans and maintenance loans. Don’t add to this with additional debt, unless you absolutely have to. Carrying around a credit card might lead you to purchase new clothes, a laptop or maybe even gig tickets. Before you know it, you’ve got a big credit card balance that you probably could have avoided.
Banks offer student accounts with very tempting offers, like fee-free overdrafts. These are very easy to use, but significantly harder to pay back. It’s particularly hard to pay back borrowed money as a brand new graduate, looking for work and out in the world with rent and bills for the very first time. Those student overdrafts don’t stay fee-free forever.
Remember that according to most terms and conditions documents, banks have the right to reduce the overdraft on your account at any time. If they do this, you’ll be expected to pay back what they’re no longer covering. A debt advisor from ClearStart, or services such as the National Debt Line and StepChange can offer advice and help if you’re in over your head.
2) Be on good terms with your bank
Do what you can to be on your bank’s good side. This can include paying back what you owe as soon as possible, and seeking advice quickly if you’re struggling financially.
If you feel that your bank isn’t offering good customer service then you’re free to switch to a different bank.
3) Learn about loans
If you are going to take out a loan, pay particular attention to interest rates and repayment rates. As a student your credit rating may be low, which means that you might only be accepted by loan companies that charge extremely high interest rates. Taking out a high interest loan could lead to years of financial struggles.
Above all else, have a budget that you can follow. You can keep this on your PC or tablet computer, ready to be regularly updated. Make sure that it covers everything that you have coming in and going out, including wages and student loan payments, rent costs and food money.
With a clear budget, you should be able to keep control of your money and even build up savings for those unexpected events.
*This article was provided by ClearStart. For every Individual Voluntary Arrangement that starts with ClearStart on referral from FamilyLives, ClearStart will donate £500 to FamilyLives.
ClearStart is a trading name of Clear Start Partnerships Limited.
Call ClearStart on 0800 9887601 if you need advice.