Student Finance - Overview
Students & Money
Students and money have been a hot topic for a long time. Although you are gaining essential skills in a competitive market, you will need careful financial planning to fund your study as well as enjoy yourself during your time at university.
This can come at a time when you may have little experience of money management – anatomy and physiology are not the only topics to learn!
Take action now
Learning to manage your money is as vital as passing your exams – and possibly more far reaching. So it's really worthwhile reading some of the extensive advice in these pages. And taking action now.
The only trouble is that the very wealth of advice itself can seem daunting. Prioritise your time by reading these pages first and then going to the veterinary oriented links.
Already in debt?
If you are already in debt, it is also worthwhile reading the Vets & Debt pages on this site – lots of useful advice here as well as reassurance that there is no debt problem which cannot be solved.
Student debt in the UK has tripled to £18 billion over the last decade – with veterinary and medical students particularly vulnerable because of the length and intensity of their courses (more years of study to fund but less time for part time and vacation work).
"We were having such a good time, it never really occurred to us to go to cheaper places, let alone the student union."
New Fees Regime - What It Means For Students
Veterinary Record - January 7, 2012
A commitment to widening access was part of the new arrangements for university tuition fees in England from 2012. Other aspects of the new regime are outlined briefly below.
- Monthly repayments from salary on loans for tuition fees will be £540 per annum less than under the present regime as the repayment threshold will rise from £15,000 to £21,000 income. Repayment is at 9 per cent of salary over £21,000, with interest rates increasing progressively for higher salaries. For those on incomes over £41,000, interest will acccrue at RPI + 3 per cent.
- Students taking longer six-year courses at universities charging fees of £9000 per year will pay back the same amount each month as students taking short degrees and paying lower fees. English veterinary students (whether studying in England or Scotland) will have larger loans to repay overall, but the monthly repayment rate will be less than now; those who do not earn high salaries will not pay off the full amount.
- Student loans are written off after 30 years, so that many will not repay all that they borrowed.
- Outstanding student loans will not affect credit ratings or mortgage applications, except in so far as monthly net income will be slightly reduced - as the loan repayment is, in effect, another form of taxation. Basic rates of income tax are substantially lower now than they were in previous decades when students paid no tuition fees and received grants. Basic rates of income tax in the 1970s and 1980s were between 30 and 35 per cent, with rates rising to 50 per cent and beyond on higher salaries.
- Loans to cover maintenance/living costs are also available, and there are non-repayable grants for those from households earning less than £40,000 per year.
Some school students may be put off applying by a psychological barrier to borrowing, but those who do choose to go to university may be more attracted to a professional degree such as veterinary medicine, where employment prospects are still healthier than in many other sectors. Veterinary students also have the benefit of their whole professional training and qualification being classed as an undergraduate degree , giving them access to government-subsidised loans for their full professional qualification. This is in contrast to other sectors, such as finance and law, where the fees for professional qualifications have to be self-funded, or covered by bank loans, or may be paid by an employer only when the trainee has secured a job.
Student Loans
Advice from moneysavingexpert.com
Martin Lewis from moneysavingexpert.com says that a certain level of debt is unavoidable for students today: "The real question is, what's the right way to fund, borrow and live as a student?".
Martin Lewis has just published his guide to Student Loans 2012 with 20 key facts that every potential student should know. To quote him in short:
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The changes ONLY hit new September 2012 undergraduates. Existing students and 2011 starters stay on the current system.
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You don't need the cash to go to university. Fees are automatically paid by a Student Loans Company loan. There are loans for living costs too.
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You only repay if earning over £21,000 & it wipes after 30 years.
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Repayments are £540/year LOWER than now. Current graduates repay 9% of earnings above £15,000. The new threshold is £21,000 (which will rise with average earnings) so future grads will have more disposable income
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You will owe money for LONGER and may pay a lot MORE. As you repay less each year, the original debt's bigger, and you pay higher interest, it'll take MUCH longer to repay the loan than now.
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Monthly repayments are the same, whether fees are £6,000 or £9,000. The course fee doesn't impact monthly payments as they're set at 9% of earnings above £21,000 - though it could mean repaying more in total.
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Many will NEVER pay it all back. Many starting even on £25,000 salaries won't repay all owed within the 30 years meaning you repay for much of your working life. The slight silver lining is it means for many there's no increased total cost by doing a £9k course than a £6k course.
View a great film of Martin Lewis talking to students at LSE about How To Survive Financially As A Student
Work out your budget and stick to it.
Learn from the bad experience of others
All students have probably been a little frivolous with their funds from time to time, particularly when starting at university and revelling in the new-found financial freedom of a student loan. Whilst most learn to rein in their spending after a dose of guilt and realisation of the need to budget, a few don't wake up to the problem until it's too late - as one student tells:
"When I got to university and banked my first student loan cheque, I felt amazingly rich, as I imagine many people do. With only a fraction of it going on my halls rent and my parents agreeing to pay my tuition fees, I think I subconsciously decided that the rest of my money was there for me to have a good time with.
I made friends with a lot of students during freshers’ week. As we’d never lived in a big city before, we wanted to try out some of the posh bars and clubs – which were inevitably very expensive to get into and then to buy drinks at. We quickly got into a routine of going out 3 or 4 times a week. But we were having such a good time, it never really occurred to us to go to cheaper places, let alone the student union.
I didn’t keep track of my spending, and when it came to December, I realised I’d almost completely spent my first loan instalment and had nothing to spend on buying food – forget Christmas shopping. I sheepishly told my parents, who bailed me out. In a way, I wished they hadn’t – I didn’t learn from the experience and repeated the same mistake the following two terms.
I’d tell myself I was on a hard course and therefore deserved to have some fun as well, and would go clubbing and spend anything up to £80 on a single night out in the city centre. But rather than admit the problem to my parents again, I took out two credit cards and used them to pay for everything. I didn’t really understand the interest rates, instead getting drawn in by clever marketing, and found myself in a mounting pile of debt at the end of only the first year of the 5-year course. I later found out that my friends, as well as being only on 3-year courses (a fact I’d conveniently ignored!), had all been getting regular handouts from their parents – something mine couldn’t afford to do!
By the end of the year I realised I had to change my lifestyle. The priority was to pay off the credit cards as soon as possible as the interest rates were horrific, so I joined a temping agency and worked the whole long summer after the first year, whilst my friends went on holiday. Through this and weekend work during the second year, I finally paid off the horrendous debt and cancelled the cards.
Now that I’ve dug myself out of the hole, I force myself to budget for food and books and so on before spending money on going out – and I’ve learned to have a good time at cheaper places!
My advice to other students would be to keep track of your account at least weekly so you know where your weaknesses lie; budget for the sensible stuff first; and stick to debit cards unless you know exactly what you’re doing."
Managing Your Debt
Start here…
The most important way to deal with debt is not to ignore it and hope it will go away. Letters from creditors should always be opened and dealt with as soon as possible. If you don’t reply to the letters, at worst the bank could ‘freeze’ your account and refer the debt to their collections / debt recovery department. This would mean losing both your account and your overdraft facility. At best they will be charging you high interest on an “unarranged” overdraft (the excess borrowing on top of your normal overdraft if you are still over your limit).
Speak to the bank and explain your difficulties. Check when your next student loan payment is due and see if the bank can wait until then for repayment of the unarranged overdraft. If you are paying high interest charges and can’t negotiate with the bank to reduce them, you should try to put some money into the account to get back within your overdraft limit - try to get a temporary loan from friends or family, see the Student Finance – Resources page for details of your University's finance support office - they may be able to offer an emergency loan or hardship payment.
Take Action
Make a list of all the bills, including how much each is for and then prioritise the debts. Very large or very late bills are not necessarily of highest priority. Pay off priority debts first but make sure you contact all creditors so that they know you are not avoiding payment.
Priority debts
These are debts owed to creditors who can take strong legal action against you if you do not pay. They include:
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Mortgage or rent arrears - the house could be repossessed by the bank or the landlord could have you evicted.
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Fines (eg for traffic offences) - bailiffs can be sent to seize possessions or you could be imprisoned.
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Fuel bills (electricity/gas) - you could be disconnected.
Non-priority debts
Credit and store cards, bank loans and overdrafts, catalogue debts and money owed to family and friends, although stressful, potentially embarrassing and not good for your credit rating are non-priority debts as you cannot be imprisoned or made homeless or without heat and light.
This doesn’t mean they can be ignored - eventually your creditors will take you to court if you fail to make contact with them or make some offer of payment.
What if you can't make minimum payments or cover essentials?
If you can't make your minimum payments or cover your essentials, you can go to a non-profit debt counselling service:
They will draw up a financial statement with you (a sheet detailing your income and expenditure) and calculate how much available income you have. An offer based on this will then be made to each creditor and a request made for interest and charges on the account to be frozen. If you have no or very little available income token offers of say £1 can be made.
An advisor may negotiate with creditors on your behalf as well as checking your entitlement to hardship funds and benefits. If you do not have advisers at your instituition that can provide you with this service your local Citizens Advice Bureau will be able to do this for you.
If you are still able to make your minimum payments but feel very anxious about your level of debt, you might want to look at the Manage Money and Spend Less pages on this site for advice on how to cut your costs and use this extra money to gradually pay off your debts.
Pay off priority debts first.
Student Debt Surveys
AVS/BVA Survey of Veterinary Student Debt 2009:
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Over a third of students surveyed (35%) reported difficult or severe financial problems.
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Graduate debt has increased by 17% since the last survey in 2005, averaging £22,300 in 2008. As higher tuition fees were introduced in 2006, those leaving in 2011 are expected to have debts of £29,400.
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23.4% of respondents said that their debts would have a large effect on their choice of job after graduation.
Student BMJ Survey of How Medical Students Spend Their Money 2006/7
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Just over 64% said they received financial support from their parents – averaging a little over £3,000 per student for the academic year.
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Average monthly expenditure on accommodation was £320 – ranging from £442 in London to £261 in Wales.
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Other average costs nationally ranged from £117 per month for food and £85 per month for entertainment to £46 per month for personal items.
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Nationally half ran a car or motor bike – but this varied from 36% in London to 73% in Wales.
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59% of students replying had at least one credit card and owed an average of £969, whilst 55% of students replying had a bank overdraft, averaging £1,426 each.
Help for Stress & Depression
If you are struggling to deal with your financial problems, you may find it helpful to speak to someone with personal experience of the veterinary profession about your finances and anything else that is troubling you.
You can contact the Vet Helpline 07659 811 118 where volunteers offer an empathetic service and can tell you how to get more specialist help if necessary . It can also be useful to talk to your student counselling service
See the Depression at University, Stress Anxiety & Depression and Student Support - Resources pages on this site for much more on this and links to all the relevant counselling services.
Debt can make you depressed and depression can make you spend recklessly.
Useful Links to University Advice
Financial Support staff are available to offer advice and information on all aspects of student finance including University and Government Funding, such as bursaries and Student Loans. Students can apply for support funds such as the Access to Learning Fund through these offices:
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London
Useful Links to General Advice
Moneysavingexpert.com
Moneysavingexpert.com home page
See also their Debt Help Plan
Credit Action
Credit Action Home Page– Credit Action offer a range of resources, tools and training to help everyone handle their money well and also to help others to do so.
Download the charity Credit Action's Budget Builder– an online interactive budgeting tool that allows you to manage your income and expenditure.
Moneymanuals – a range of downloadable manuals covering topics such as Dealing with Debt, Redundancy, Savings & Investments, Students – and even one which helps you think about money!
Money Basics - a branch of Credit Action above
Moneybasics home page – a range of calculators, advice guides, downloads, case studies etc to help you handle your money. A very large range of resources here written in clear English.
Moneybasics spendometer – a downloadable application for mobile phones which helps you keep track of your expenditure.
TheSite.org
TheSite.org home page – this is a brilliant support site for young adults across a wide range of topics – see their Manage your money well page
Directgov (government portal)
Student Finance page – lots of useful information here.
Department for Education
Department for education home page
Welsh Assembly - 0845 602 8845
Student Awards Agency for Scotland - 0131 476 8212
Northern Ireland - 028 9025 7710
Student Finance Northern Ireland
Non-UK, EU Students (Directgov) - 01325 391199
Finance for students from other EU countries
Student Loan Information - 0800 40 50 10
Tax Credit Information (Inland Revenue) - 0845 300 3900
National Union of Students
National Union of Students home page (NUS)
Hot Courses - Scholarship Search
Student Money Scholarship Search
Searchable database for scholarships for undergraduate scholarships and grants offered to academic institutions, commercial organisations and charitable trusts.
See also Student Finance – Resources for more links.
Part of content is reprinted with kind permission of the Royal Medical Benevolent Fund from www.money4medstudents.org