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How to budget for university

·5-min read
A young woman managing her budget, sitting at a kitchen table with a laptop
Work out what you need to cover living costs, expenses and a disposable income that allows you to have a reasonable social life. (Photo: Getty)

Around half-a-million students will head off to university for the first time this September. For many it will be their first real introduction into managing money, and the temptation to go wild after 18 months of pandemic restrictions will be hard to resist.

The average undergraduate in England now leaves university with debts of more than £50,000, according to the Institute for Fiscal Studies, and this rises for those from a poorer background due to their eligibility for more loans.

Understanding what funds are available, how to make your money last and the practicalities of taking on work while you study are all essential things to consider to prevent your debts from spiralling.

Get your loan

The first step is to find out what loans you are entitled to. Most undergraduates are entitled to a full student loan to cover tuition fees up to a maximum of £9,250 a year, with 5.6% interest charged on top.

Loan repayments don't start until the April after graduation and only kick in if you are earning £27,295, or £524 a week. If you never earn over this amount you will not have to repay the loan and any outstanding debt is written off after 30 years.

Read more: How to avoid overpaying on your UK student loan

Students can also apply for the mean-tested maintenance loan. The amount you are entitled to will depend on your household income, whether you are living at home and whether you are outside London. The 2021/22 loan ranges from £3,516 to £12,382 per year depending on your circumstances.

The maintenance loan is unlikely to cover all of your living costs such as accommodation, bills, food, transport and leisure activities. It is really important to look around for grants, bursaries and scholarships. Contact the university student service centre and find out what they offer.

Funding may also be available via Student Finance for things such as travel, disability or dependents.

Bank wisely

Choosing a good student bank account will put you in a strong position from the very beginning. Many banks will try to lure you in with offers of cash back and freebies, but the most important thing is the overdraft. On student accounts this is interest free so even if you don't use the money it is worth taking it out and stashing it in a savings account, before paying it back and pocketing any interest.

And remember you can switch bank accounts while you are at university but make sure you find out if you can transfer your overdraft across too.

It can be a good idea to put your maintenance loan into a savings account and set up a direct debit into a current account to pay yourself a weekly or monthly amount. That way you are less likely to blow your budget before the end of the year.

Get working

Earning money at university is now the norm, rather than the exception, with 61% of students saying the maintenance loan is not enough to live on. Depending on where you are and student numbers in the area, getting a part-time job may be your best option. 

Make sure to check out your course timetable in advance as university sessions may be timetabled until as late as 8pm and try to get work that can offer flexible shifts around your lessons.

Universities often employ student ambassadors to help at open days and other events and this can pay more than the minimum wage so it is worth pursuing.

An alternative way to make money is to participate in online surveys or to test products via sites such as Swagbucks, YouGov, Prolific Academic, Ragdoll and Proinsight. You can also earn vouchers via SnapMyEats by simply photographing food receipts.

Have a plan

A survey by Save the Student revealed that 71% of students wish they'd had a better financial education before going to university.

It can be a major cause of stress so it is vital to have a budget from the beginning. Work out what you need to cover living costs, university expenses and a disposable income that allows you to have a reasonable social life.

Watch: How to live off a student loan

A simple calculation is to work out your total income for a term at university, minus your essential expenses (rent, food, bills, transport, course materials) for the same period. Then divide this figure by the number of weeks in a term. This is your weekly budget for non-essential expenses (takeaways, drinks, clothes, hobbies, travel).

For example, if your income across the first term is £3,000 and your essential expenditure adds up to £1,500, you would have £125 a week disposable income, across a 12-week term.

Read more: How student debt can affect your mental health

Use a spreadsheet to record your income and outgoings and make use of apps like Starling Bank and Monzo which label your purchases. These apps can send you notifications if you are overspending and can also help you with particular savings pots. Apps like PayFriendz are also super useful for splitting bills and avoiding arguments.

Maximise discounts

Most major high-street retailers offer a 10% discount on clothes and goods, and eateries often have loyalty schemes and student offers. You can find the best prices and deals via apps like CheckoutSmart, Idealo, Vouchercloud and mySupermarket.

It is also worth investing in a Young Person's Railcard, which may come free with a student bank account, as this will give you a third off train travel, which will come in handy when going home or visiting friends.

And if you move into private accommodation make sure you apply for council tax exemption and switch to a cheap energy supplier if possible. Learning how to cook can also save you a fortune as buying ingredients is far cheaper than purchasing ready meals or takeaways, particularly if you use local markets.

For more advice visit Savethestudent.org and Studentfinance.campaign.gov.uk.

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