Four financial tips to take with you to college

Thus, you have obtained your A-Level results and won a place on the course of your choice. Once the party is over, your thoughts will inevitably turn to the practicalities. And that will include money.

From choosing the right bank account and managing a budget for the first time to finding ways to cut costs, there’s plenty to do before you set foot in the first lesson.

We all know college doesn’t come cheap. In 2019/20 the average combined tuition and maintenance loan was £15,400, according to figures from the House of Commons Library, obtained by Hargreaves Lansdown. The average will hit £16,700 in 2026/27, the data shows.

This means the average student debt from last year is expected to be £45,800, and only one in five are expected to pay it all back.

Sarah Coles, Senior Personal Finance Analyst, Hargreaves Lansdown: “In an ideal world, parents can teach their children vital lessons about budgeting, planning, borrowing and saving over the years. However, you can’t always do everything and you still have weeks to get the basics right.

So here are some “basics” to help you prepare financially when you leave home and start college.

1. How to find the best student bank account

First, you’ll want to open a student bank account. One tip we repeat weekly here on The Money Pages is to shop around. In other words, don’t settle for the student account with your current bank, you are not tied to it. Go do some research to see if other banks can offer you more.

According to the financial experts at Moneyfacts.co.uk, the most useful “benefit” of a student account is the interest-free overdraft. So this is where you need to focus your attentions when researching.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The most generous allowance of up to £3,000 is currently available from the Nationwide Building Society and HSBC.

“Students can also get a free £100 offer from HSBC this year, up from last year’s £80 offer.”

Barclays reduced its overdraft from £3,000 last year to £1,500 – however, it has also renewed its online library for free, representing an annual saving of £96.

Meanwhile Santander has renewed its Railcard offer which it says can save students an average of £636 over a four-year period.

Check them all out and figure out which one gives you the best value for money based on your situation. If you’re a regular train user, the Santander account could be incredibly useful, but for conductors, it’s worthless.

Rachel said, “Finding the right student account is crucial, so students should compare all of any account to make sure it meets their needs.

She added: “Those struggling would be well advised to seek advice from family and friends and remember that any overdraft they borrow will have to be repaid.”

Scroll to the end of this article to see the Moneyfact Student Accounts Chart

2. How to manage your student budget

You’ve probably had some experience managing a budget before, but in many cases things are about to kick into high gear now that you have housing costs, bills, and other expenses. daily to take into account.

Sarah Coles advises anyone who receives a maintenance loan to transfer it out of their account on day one.

“You’ll be paid in just three installments each year, so there’s a real risk of accidental overspending,” she said.

“Some people immediately transfer enough money for bills and rent into a separate account, so they’re never tempted to dip into money for essentials.”

Sarah also recommends taking the time to fill out a budget planner, so you can plan out everything you need to spend.

“It’s incredibly difficult to figure out what costs you’ll have when you’re first starting out, which is where parental help can come in handy.”

Applications such as Money Dashboard can be useful for this.

3. Avoid debt as much as possible

Student debt is inevitable, but avoid letting it fly by being careful when considering the loan you will use.

We have already covered overdrafts in the bank account section. These are a standard part of your account package and provided you are using them as an emergency fund as opposed to supplementing your student loan, you will find them very useful.

Credit cards are another matter. Sarah explained that your bank might try to sell you one, but she warned that minimum repayments would make it seem like an easy way to afford what you want.

She added: “If you don’t repay, you’re going to rack up significant interest charges, and everything will eventually have to be repaid.” If you don’t win anything, it will give you a real mountain to climb.

Sarah also advised avoiding store cards – they are “horribly expensive” and urged students to be reasonable about buy-now-pay-later payment options at checkout.

“It may seem like a free way to spread the cost, but it’s debt,” Sarah said.

“If you use it, you need to understand exactly how much you’re borrowing and the total of all your repayments.

“You also need to appreciate the consequences of missing payments – which in some cases will show up on your credit report. As with any debt, think before you buy. If you don’t really need it right now, you shouldn’t borrow to pay for it.

4. Learn money-saving techniques to cut costs

There are plenty of ways to reduce your expenses when studying, from taking advantage of loyalty cards to making sure you’re aware of all the student benefits. Here’s a quick list of some of the best cost-cutting tips:

Tax: Students do not pay council tax, so check that you are not charged. If you work and earn less than £12,570 you won’t pay income tax, so check your payslip.

Student discounts: Find out which retailers offer student discounts and prioritize them when shopping. Sarah suggests signing up for Unidays and Student Beans for online discounts and looking for brands – Apple, Amazon and Spotify are among them – that are doing the same. Don’t forget to subscribe to the NUS Extra Card and the Carte Train Jeunes.

Cut out your groceries: Use supermarket loyalty cards to earn discounts and see This article for ways to shop smarter and this one for advice on meal planning.

Student account selection table
Supplier and account Overdraft without interest incentives
Bank of Scotland – Student Account Year 1 – up to £1,500
(0-6 months £500,
7-9 months £1,000
and 10 months + £1,500)
Year 2 to 3 – up to £1,500
Year 4 to 6 – up to £2,000
Free sign up for daily deals.
Earn up to 15% cashback from selected retailers.
Barclays Bank – Student Supplements 0-11 months £500
Year 1 – up to £1,000
Year 2 – up to £1,500
Earn cashback with Barclays Cashback.
Blue Rewards is available as an add-on for £5 per month.
Free access to Perlego for 12 months, a digital library of university textbooks, for accounts opened between 8.7.22 and 30.11.22 and redeemed before 31.12.22.
Halifax – Student Year 1+ – up to £1,500 Cashback Extras – Earn up to 15% cashback from select retailers. Credit interest of 0.10% AER/gross.
HSBC – Student Bank Account Year 1 – at least £1,000
Year 2 – up to £2,000
Year 3 – up to £3,000
Receive £100 upon opening and make a minimum of 5 trades within 30 days of opening.
Eligible for Regular Saver account.
Lloyds Bank – Student Year 1 – up to £1,500
(0-6 months £500,
7-9 months £1,000
and 10 months + £1,500)
Year 2 to 3 – up to £1,500
Year 4 to 6 – up to £2,000
Free sign up for daily deals.
Earn up to 15% cashback from selected retailers.
National Construction Company – FlexStudent Year 1 – up to £1,000
Year 2 – up to £2,000
Year 3+ – up to £3,000
No charge for using a debit card abroad.
NatWest – Student Year 1 – up to £2,000
(1-4 months £500,
5 months + £2,000)
Year 2 to 5 – up to £2,000
Receive £80 paid into your account within 10 days of opening a new account or converting an existing account, Flavor Card, valid for 4 years, offering 50% off food or 2 for 1 meals, as well as offers on entertainment and shopping. You must enroll in mobile/internet banking and opt in to paperless statements within 30 days of opening. Offer valid from 4.7.22 to 31.10.22.
Free 24/7 emergency cash service.
Royal Bank of Scotland – Student Year 1 – up to £2,000
(1-4 months £500,
5 months + £2,000)
Year 2 to 5 – up to £2,000
Receive £80 paid into your account within 10 days of opening a new account or converting an existing account, Flavor Card, valid for 4 years, offering 50% off food or 2 for 1 meals, as well as offers on entertainment and shopping. You must enroll in mobile/internet banking and opt in to paperless statements within 30 days of opening. Offer valid from 4.7.22 to 31.10.22.
Free 24/7 emergency cash service.
Santander – Student current account 123 Year 1 to 3 – up to £1,500
Year 4 – up to £1,800
Year 5 – up to £2,000
Free 4-year Railcard 16-25 for new customers, including discounts on other activities.
Earn up to 15% cashback from selected retailers.
Preferential rates, offers and discounts at 123 World.
TSB – Student Year 1 – up to £1,500
(0-6 months £500
7-9 months £1,000
and 10-12 months £1,500)
Year 2 to 6 – up to £1,500
Credit interest up to 5% AER (4.89% gross).
The list of student accounts is only a selection. Any overdraft is subject to the status of the applicant.
Source: Moneyfacts.co.uk.