In the red: handling debt
Students have always complained about being broke. Chaucer even makes gags about it in The Canterbury Tales. Honest.
Over the last couple of decades the situation has gone from one where students faced the challenge of merely staying out of the red to one where even the official funding system acknowledges that they could graduate with around £21,000 (more like £27,000 in London) of debt.
Just how deep the debt hole will have sunk by the end of the decade remains to be seen. The average debt on graduation is currently between £15,000 and £20,000 - but take this average with a big sack of sodium chloride as the cost of living shoots up and loans get bigger and bigger and students delay paying their tuition fees until after university. Figures up to £35,00-£40,000 have been bandied around for the not too distant future - like an elephant in a chocolate factory, the average will only get bigger.
So while some students may make it to graduation without borrowing anything, most will wind up a firm five figures in the red.
Try moaning about student debt to someone with a mortgage and they probably won’t be too impressed – but, if you have a mortgage, you probably have property to show for the hole in your finances. You probably also have a salary to support your repayments. Most students have neither.
Does this sound a tiny bit negative? Well, it shouldn’t put you off. It’s only money, after all, and as the great Bob Dylan once said, ‘What’s money? A man is a success in life if he gets up in the morning and goes to bed at night and in between does what he wants to do.’
Bloody hippy. Someone go tell him that a degree’s an investment.
The good news is that it won’t be a problem if you follow some key dos:
- Do borrow wisely.
- Do spend according to need rather than want.
- Do keep tabs on your bank balance.
- Do tap every available resource.
- Do get yourself a good holiday job.
Do try to get some work during holidays, so that you can pay off all or part of your overdraft – then you'll have the facility available to you once again when you begin the next term. It’s not much fun to start term in the red and counting the days until your next loan instalment clears. Prepare yourself for the unexpected.
...And steer away from a few don'ts:
Don’t let debt take over your life. It will only become a problem if you let it and ignoring red bills and letters from creditors or applying for more loans when you can’t pay off the ones you already have is just asking for trouble.
Don’t be complacent and assume it won’t happen to you. Even the meanest misers, penny-pinchers and prudent puritans are often amazed at the flash with which their bank balance transforms from healthy wealth to black hole.
Don’t get behind with bills.
Last updated on: 09 April 2009