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Articles > Rant December, 29, 2011

How (not) to spend your student loan

Matthew Scholar
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I often find that money burns a hole in my pocket. When I checked my balance after my loan came through and I had over a thousand pounds I immediately wanted to purchase a luxury pet such as a pelican, a slow loris or perhaps one of those cats with squashed faces. For most undergraduate students their loan is the largest amount of money they have ever had access to. I imagine that, like me, the temptation to spend it on things they have always wanted is all too great. On top of this the banks don’t exactly encourage responsible spending. With the ridiculous overdraft offers on the student accounts luring students into debt, I decided to stay with my normal saving account to avoid temptation.

A slow loris – not something you should be spending your student loan on. Photo by snowflakegirl

However, the bank had created another way for me to be irresponsible with my money. I had been planning on creating a standing order, which would allow me to live on a set amount of money each week, but apparently I was not deemed worthy of this option as I had ‘the wrong account’. Now I have to log on to digital banking every week and manually transfer my funds. Every time I do this I contemplate for a while and then transfer how much money I think I’m likely to spend in the week, instead of living on a stricy weekly budget like I originally planned.

On the surface this doesn’t really sound like much of a problem but if you don’t budget you could fall into some expensive habits. Whether its buying expensive brands of food, regular nights out or a crippling crack addiction you’ll find that your spending more money than you realise. If you don’t realise or you fail to address your overspending you’ll eventually find yourself surviving off your house/flatmates left over and out of date meals, wallowing in your own self-pity, reduced to performing degrading acts in the high street for small change. Your life will get gradually worse until the next payment of your loan. At this point some will realise the error of their ways, others will go out and buy the cat with the squashed face and the vicious cycle will continue.

At university we’re lucky that we can make these mistakes and not end up having to wash our clothes in public toilets – providing you only make the mistakes once. As well as getting a degree we’re also lerning how to look after ourselves. Your student loan will probably be the best loan you get in your entire life, you pay no interest and you don’t have to start paying it back until your earning over £15,000, and even then you pay it back gradually. Make the most of it, go out and treat yourself with it, but just remember to make sure you have enough to survive on.

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  1. Pippa Williams

    I completely agree. Also, I don’t believe that there is enough structure or advice in stopping students in spending all their money at once. If there was proper structure then maybe people would come out of university with a little less debt than they had imagined.

  2. Doy

    I agree

  3. Rebecca Witterick

    Yeah I definitely agree with you. When i first got to university I realised that I could do all the things I wanted to do that I couldn’t do at home. I spent alot of my money on nice cereals and other branded foods. Also, because I was away from home I bought myself a hamster, which wasn’t a large expense. Once I got into my second year, however, after spending large amounts of money at Ikea to furnish my property, I bought a dog :). It was the best £600 that I had ever spent, but I realised that it probably wasn’t the smartest idea for a university student.
    I am lucky enough to have my parents supporting me through university, but not all students have that luxury and my flatmate in my first year was having to do a full-time fashion job just to scrape her way through university; although she did go out alot and spent alot of money on alcohol.

  4. Lauren May

    I’m applying for universtiy and the idea that I had this money was what nearly made me turn off the idea. Although I’m a saver knowing I had this money in my bank would make me spend. But, knowing at the end of it I will get a debt scares me as a person. But, i have been raised not to spend money on stupid stuff and I have a job too and because I am staying in Cardiff where I am from anyways. So if im honest, I think it depends on your personalitiy regarding money.

  5. nick morrissey

    I found the best method for increasing your amount of loan was to go to the casino and put the maximum amount on RED, never black! and it came up and im £300 richer for it!

  6. Afshan Bajwa

    I think making sure that when you get a bank account … get a responsible one and actually talk to the people there … that should help … like the standing order etc

  7. Amy Smith

    I would probably say good habits should start at university. If you’re lucky enough to be able to think about buying ridiculous things with your money, chances are you have a family or friends or someone who can help to support you and help you on the way to making good decisions.
    Also, I hate to point it out, but you’re studying English and still managed to use the wrong “your” and “its”.

  8. charlie

    Idiot! the loan is not interest free- the SECOND you receive the loan it starts accruing interest! And for all the people post comments about getting a job- there are some degrees where you are actually advised NOT to get a job- eg medicine/ vet (and other courses where you actually do some work) – rather than having only 4 hours contact time a week- that’s the amount of time we get off per week!

    • Ross Macdonald

      The Interest on the loan is inflation only, so although the value of your loan seems to have gone up, it’s not in real terms because wages etc will have increased by near enough the same amount, along with any interest you make on money you have in the bank, although I realise as a student that might not be a lot. Either way Matthew’s point that it’s the best loan you’ll ever get is bang on, you won’t get anything cheaper from any bank that’s for sure. Also you seem to be having a go at any subject that ‘doesn’t do real work’ obviously subjects like medicine are more time consuming and harder, you get paid accordingly when you graduate, but no need to have a go at people who have the time and need/want the money, no reason why they shouldn’t get a job. In fact many people give up all their spare time to do so because they simply need to.

  9. tom

    the people who tend to impulse buy crap with their student loans tend to be living in uni accomodation. I live in a privately rented house with another student, have to pay all my bills and food whilst working 16-20hours weeks to pay off my £1000 overdraft and £700 credit card bill resulting from repairing my car which i need to get to jobs and uni. If people are not clever enough to avoid overspending on useless stuff, then they deserve to live in squalour. By all means treat yourself, uni can be hard work, but its at this stage that we all learn to grow up and learn how to responsibly look after ourselves. If you can’t do that how will you ever make a success of yourself

    • Joanna Sutton

      Surely you don’t NEED a car… I live over 3 miles from my University and I’ve managed to get there every day with a £270 bus pass (much cheaper than buying, taxing, insuring, maintaining and running a car I think you’ll agree). Plus I’m living 100 miles from home but by using discount sites I can get a return train ticket for £10 whenever I want a weekend at home. A car is definitely NOT a student essential as it’s a complete drain on money that could be much better spent.

  10. Mirjanur Choudhury

    It is best to keep. It’s of it, so you can pay it back easily

  11. Hannah S

    to be honest, surely these problems are only for those students too lazy to get a job, or living in a cheap city! I’m at uni in London and my loan doesn’t even cover a years rent, let alone these “must have” items, so i have to work to support myself, which obviously in turn effects my studying. I’d hope that if people are clever enough to get into university, then they would be able to understand the basics of not spending what you haven’t got.

  12. Alexander Heather

    To be honest, it’s your own responsibly when it comes to spending money and nothing to do with the bank. After my first semester I only owe the bank £50 because, I had to spend £350 on my deposit for my house next year, which I didn’t budget for at the beginning of the year because I had no idea about it and, I have always treated myself because I’ve worked out how much I have or in some cases don’t have.

    • Vahid Djalily

      Student loans are a blessing to some, a spending spree for others… Buying physical things can be good, as then you have something to show for it, and sell later if needs be – if you just spend your money on bills, your money will dissipate away, probably. As a music student I need equipment and software; I work, but with extortionate rent, I’m not sure how I would’ve survived without grants and loans?!

      I agree with Alex when he says’ it’s your own responsibility when it comes to spending money…
      Banks (being good with their money, it would seem) should (morally) offer advise on how to save/budget and plan.. Most banks, I’m pretty sure, do offer things like this, but they can’t make one take the advice, it’s the individual who must seek out this advice.
      Lloyds TSB have ‘money manager’ where you’re given a graph to identity your spends….
      SEE, they do help 😉

  13. Brilliant, this is a must read for every student, they should put this in every university welcome pack. It will save a lot of fustration and panic, I know as I decided I’d be able to easily afford to live on my own whilst studying, luckily I have a job and i’m just about managing to pay for everything but I wouldn’t make that mistake again, I’d find someone to live with.

  14. Zoe Cheale

    i dont understand how people dont think ok i have to live for the next four months on this yeah lots of money woo but its got to make it 4months so when u look at that way not so much money!

  15. Sarah Potter

    You don’t have to start paying it back until you’re earning over £21,000.

    • Raymer-fleming

      On the new scheme. Those of us getting in on ~£3500 a year fees start at £15,000pa

  16. Jonathan Willis

    I didn’t think much of the student loan, it wasn’t something that made me want to buy loads of items, neither did I take any notice of the overdraft which oddly after 7 years is still unused and active on my old student account. However… I spent ~£1,000 on DVD’s within the first year of my course, that was the one and only mistake i made. The problem is now I like DVD’s now and have ended up with quite a collection. The grant and loan and received after my first year, was much better invested. I was able to save during my student years because I kept my income above my outgoings and put it all into cash ISA’s.