Good Financial Planning Could Reduce Student Debt
on: September 17, 2009, 7:35 am
Author: Melanie Taylor
to a report that found that 24% of students in the UK expect to
graduate with over £20,000 of debt, Debt Advisers Direct
has advised students that with the right financial planning, the
amount of debt they take on can be reduced.
company added that students should avoid taking on debt (i.e.
any debt outside their regular student loan) wherever possible,
as this could increase their risk of debt problems in the future.
by the Association of Investment Companies (AIC) looked into the
financial expectations of UK students. It found that 24% thought
they would leave university with more than £20,000 of debt
- although the picture varied between countries.
Scotland, Scottish-born students are not required to pay university
tuition fees. This is reflected in the AIC's figures: only 26%
of Scottish students expected to take out a student loan, compared
with 55% across the entire UK.
spokesperson for Debt Advisers Direct commented: "Debt is
a big concern for many students. The introduction of top-up fees
in recent years has added a significant amount to the debt many
students will be expected to repay once they graduate.
it's very important that we distinguish between student debt in
terms of an official student loan, issued by the Student Loans
Company (SLC), and other forms of debt.
student loans are designed to be paid back once the student graduates
and is earning enough to meet the threshold - currently £15,000
a year - and only as a small percentage of earnings above this
amount. In that respect, a student loan is not likely to cause
significant financial hardship.
students who have borrowed money in other ways could find themselves
in more difficulty. Things like personal loans and credit cards,
for example, usually require regular repayments and tend to carry
higher interest rates. This is not ideal for students, who usually
survive on a relatively low income.
risk is that the more debt students take on, the more likely they
are to have trouble meeting their repayments. For that reason,
we advise students to steer clear of taking on additional debt
Debt Advisers Direct spokesperson added that while most students
experience financial difficulties at one stage or another, there
are other things they can do to improve their situation.
is plenty of advice available, both online and from expert financial
advisers, on ways for people to manage their finances well. For
example, we have just released a
guide on ways to cut back without compromising their social life
- which is particularly relevant to students.
key is good financial planning. Students should look to budget
their money well, avoid impulse purchases, and above all plan
ahead - simple steps like only taking out a small amount of cash
at a time can often make all the difference.
people who do find themselves struggling with debt, it's essential
that they speak with a professional debt adviser to discuss their
options. Left alone, debt can grow very quickly, so it's very
much a case of the earlier, the better."
Contact Details: Melanie Taylor
South Langworthy Road
0845 056 6480