How do students fall into debt and what should you be aware of. Guest blog by our Academic Registry Administrator, Alex Clark

Posted on: 2 October, 2019

We have just welcomed our latest cohort of students onto our undergraduate and postgraduate programmes. Studying a degree can be an expensive endeavour but there is help to support you financially and advice on what pitfalls to avoid.

Here, our Academic Registry Administrator, Alex Clark – himself, a recent Business Studies with Marketing graduate from Bournemouth University – presents his key findings from the research he undertook on the topic for his degree and touches upon ways to avoid falling into debt as a UK student…

For my research project during university, I wanted to find out why students fall into debt and how large a concern it is for them. Being a student at the time, I could relate to what it’s like to apply for my Student Loan and seeing on my computer screen that I would have to repay £9,000 each year I attended university. And that did not even take into account my maintenance loan which covers things like food, rent and books.

In my research, I covered four factors:

• Housing
• Travel
• Credit
• Student Loans.

Housing

Britain is a country of homeowners. Renting today is seen as an unsustainable way to live and, indeed, a burden on people’s wallets. The problem with this is that homes are now so expensive. Many first-time buyers can expect to take on huge mortgages, with sometimes unsustainable interest rates. This, of course, assumes that they can even afford the initial deposit. Despite this, the students that I interviewed seemed optimistic that they will be able to buy a home. This was no short-term goal, however; the students knew that they would have to save up a lot of money over a long period of time. Out of the 10 students I interviewed, four believed that they wouldn’t own a home in the next five years so renting was the only foreseeable option.

Travel

Travel has become such an accessible and attractive option for students and young people in general. Many students travel all over the world, taking advantage of the travel options available which didn’t exist for generations before them. Travelling is not cheap. The lure of travel can lull students into spending beyond their means and going into debt. Out of the 10 students I interviewed, seven either said that they were planning on going travelling or that travelling appealed to them. The seven students were comfortable with the financial side of it too. They believed that they would be able to fund it themselves and therefore, would not fall into debt. I went travelling, and thought I’d saved up enough, only to come back home and discover that I had gone into my overdraft.

This brings me swiftly onto my next topic…

Credit

The availability of credit for students is extremely easy to acquire. Students can set up a student bank account with a generous overdraft in no time at all. It is not only overdrafts that students can obtain easily; credit cards are also readily available. Both these forms of credit, if not used properly, can of course, increase debt for students, and despite this, they are widely used. Out of the 10 participants interviewed, eight mentioned that they are currently using an overdraft facility. As a student myself, I had an overdraft and I too had to sometimes use it. For me, going into my overdraft, was a stressful experience.

Student Loans

The most obvious and certainly, the most talked about factor of student debt is student loans. Students now have to pay £9,250 each year, plus varying costs of maintenance loans, if they wish to go to a traditional, face-to-face university. Luckily for students and graduates, the debt is wiped out after 30 years, no matter how much has been paid back. This is good then, as graduates can expect to pay 9% of their total earnings each month, providing they earn £25,725 or more. The students I interviewed, however, were mostly at ease with this arrangement. Out of the 10 students interviewed, eight said that going to university was worth it despite incurring such large sums of debt.

Advice

Students face a lot of debt when attending university. It can be daunting and stressful but it’s essential that they know what they are taking on and head to university with their eyes open about their financial arrangements.

For more advice on finance at university, head to the National Union of Students’ (NUS) Money & Funding webpage. If you are a UCEM student wanting advice about paying for programmes, head to the Student Central page on our VLE. If you are a UCEM student seeking general financial advice, head to the Welfare and Advice page on our VLE where you can find more information and contact details relating to your inquiry.