It pays to do the finances first before the university adventure
A NEW university year is about to start and for many students and their families there are concerns not only over coronavirus but the finances involved.
In a survey by the Association of Investment Companies, those planning to go on to higher education anticipate finishing their course with a debt on average of £ 38,238.
This closely matches the money burden expected by students returning for their final university year (£ 39,430), although parents are more optimistic – or naive – thinking their children will leave with a debt of £ 23,905.
More than £ 17bn is loaned to students each year. The value of outstanding loans for graduates by late March 2019 reached £ 121bn and the Government forecasts this will rise to around £ 450bn by 2050.
Regardless of the costs, attending university is still a key aspiration for many and the earlier money is put aside, the longer it has to grow. If just £ 50 a month had been invested over the last 18 years in the average investment company, a student would now have built up a fund worth £ 30,389.
Before taking the leap into student life, the youngster needs to know how much support they are likely to receive. Twothirds of parents ( 66 per cent) plan to help their children with university costs but there is a major regional disparity with the lowest contribution expected in Yorkshire and Humberside ( 55 per cent).
Students need to have a frank discussion with their parents to understand the world of money but, according to discount broker Hargreaves Lansdown, only 16 per cent have such a conversation before leaving home.
Two key arrangements need to be made before going to university: to open a studentfriendly bank or building society account and to have belongings insured.
Neither should be overlooked and now is the time to ensure the best deal available with most providers accepting applications up to six months before courses start.
A student account is usually available for undergraduate courses of at least two years, one year nursing and postgraduate level.
The priority for most youngsters should be the interest- free overdraft. The published offers for those aged at least 18 years are not automatic but subject to individual application and depend on financial circumstances, borrowing history and lending criteria.
With that major proviso, £ 2,000 is the highest sum offered in a first year ( NatWest which includes Royal Bank of Scotland). However, presumably to curtail an exuberant lifestyle, £ 500 is the limit for the initial term, which is mirrored by Barclays which then raises the limit to £ 1,000 for the rest of that year.
HSBC and Nationwide offer £ 1,000, the Co- op £ 1,400 whilst the five other student accounts all provide up to £ 1,500 ( Bank of Scotland, Halifax, Lloyds, Santander, TSB).
Check if a deposit needs to be made and within how many days before an overdraft facility becomes available, such as £ 300 in 28 days of opening with the Co- op Bank. Both Nationwide and Santander require a termly £ 250 deposit to obtain a £ 1,500 interest- free overdraft.
The initial facility is not raised for the rest of university life by NatWest, Lloyds ( including Bank of Scotland and Halifax) and the two Spanish banks – Santander and Sabadell’s TSB.
However, a request can be made for an increase at Barclays, HSBC and Nationwide ( by £ 1,000 increments in the second and third years) and at the Co- op (£ 1,700 in the second year and £ 2,000 in the third).
An ancillary but key question is to ask how soon after graduation need an overdraft be repaid without incurring interest or any fee.
Many students take some paid work and so it is worth checking on the credit earned. TSB is the most generous with an appealing five per cent interest on balances up to £ 500. Two other accounts have low levels: 0.10 per cent at Halifax and one per cent at Santander.
Ask if complimentary advice of key entries can be sent. HSBC will notify every time a purchase is made, a direct debit taken or student loan received.
All accounts except Nationwide impose charges for using a debit card abroad. Withdrawing £ 100 at an ATM in continental Europe costs £ 2.75 ( Barclays, Co- op, NatWest), £ 2.95 ( Santander) and £ 2.99 ( Bank of Scotland, Halifax, Lloyds, TSB).
A gigantic £ 4.75 is taken by HSBC.
Students like to travel and so take into account the even higher charges some providers make for using the same card anywhere in the world to access £ 100 through an ATM: £ 4.49 ( Bank of Scotland, Halifax, Lloyds) and a whopping £ 4.99 ( TSB).
Fraudsters find students an easy prey. Ask what protection is in place and what liability can arise. TSB is alone in guaranteeing a refund if someone becomes a victim of scammers.
On opening, according to independent analysis by Defaqto, incentives are offered by:
Bank of Scotland, Lloyds: discount TOTUM card and retailer cashback offers
Barclays: free subscription to Perlego online 400,000 e- books
Halifax: retailer cashback offers
NatWest: one- year Amazon Prime student membership or four- year National Express Coachcard or discount restaurant card
Santander: four- year Railcard and retailer offers.
The TOTUM card, a partnership between the National Union of Students and OneVoice Digital, is worth £ 24.99
and runs for three years. It also acts as a police- endorsed proof of age identification card.
Discounts include 15 per cent at Asos. The Coachcard would cost £ 35 and saves one- third off fares whilst the four- year restaurant card gives access to two- for- one deals.
The Railcard is worth £ 70 and cuts travel expenses by one- third for 16- 24 year- olds.
Santander’s retailer offers include 20 per cent discount at Costa, 12 per cent at Just Eat, 10 per cent John Lewis and five per cent at Nando’s.
Thieves target college districts particularly for new arrivals.
Many student belongings are unmarked or left in unlocked premises. Check if there is adequate insurance under a parental home policy which allows contents outside the property.
Many home policies allow up to £ 5,000 as standard which Direct Line sets but doubles for its Home Plus.
However, check the single article limit ( including any bicycle) and if anything needs to be specified, such as a camera, computer and jewellery.
Often policies will only cover during vacations if belongings are left in secure locked
accommodation. Out of term, many halls of residence let student rooms for conference delegates and insurers are unlikely to cover for articles placed in a depository.
Most halls include insurance within the rent which may be sufficient in the first year. Avoid risks such as leaving a laptop in the library whilst going for lunch or a room unlocked in a hall or shared flat.
“Insurers won’t pay for theft from unlocked rooms or from shared accommodation if there is no physical evidence of a break- in,” warns Brian Brain of Defaqto.