Martin Lewis gives finance advice to students going back to university
The Money Saving Expert has shared valuable advice for students starting or returning to university.
Martin Lewis warned that student maintenance loans are rising far less than inflation in England, which will leave many feeling the squeeze.
He’s shared eight tips in his newsletter which explain the current financial situation and will help students make the most of their money.
He said: ‘Millions of undergraduates across the UK are preparing to start or return to university.
‘A good chunk though will see significant financial changes that won’t make easy reading.
‘This is especially true for English students, where the squeeze looks tightest.
‘Perversely, while over the long term, new starters will need to repay up to 50% more than their predecessors, right now for them the biggest practical issue may be that the loan’s too small.’
1. English student maintenance loans are rising far less than inflation
The typical full maintenance support – used to pay for rent and bills, transport, books, food, and other essentials – increases every year, but this year the increase is well below inflation for English students.
This academic year’s support has increased by 2.8% for English students, to a total of £9,978.
Meanwhile, in Wales, the support has increased by 9.4%, to £11,720 a year, by 11% in Scotland to £9,000 per year, and in Northern Ireland by 27% to £8,136 per year.
Martin explains: ‘Contrast these to inflation, the rate at which prices rise. On the lowest measure, it was over 10% when the new English loans were announced and is still currently 6.8% year on year.
‘So this is a real-terms cut that will be a blow to many English students already close to the affordability bone – in fact, the government’s own assessment shows that in real terms the loan has been cut 11% to 15% compared to three years ago.’
2. The hidden parental contribution for English, Scottish and Northern Irish students
The amount of maintenance support a student gets is dependent on a means test of their family’s income. This usually includes parents, but sometimes also includes step-parents.
The higher their family’s income, the less support the state gives, implying parents will support their student children.
However, parents cannot be forced to fill the gap – so it’s crucial students speak to their parents ahead of time about how much financial support they may or may not be able to give.
3. New English students are on the brand new ‘Plan 5’ student loans
They’re a bit different to previous student loan plans, but some of the key points Martin highlights include:
- The student loan price tag can be £60,000, but that’s not the cost
- The amount you borrow isn’t the key factor, as the loan works more like a graduate tax
- Interest is added, but there’s no ‘real’ cost to it, and not everyone pays it
- The cost from 2023 will be substantially higher than for previous generations – many will repay up to 50% more
4. Things are staying much the same for Welsh, Scottish and Northern Irish students
If you started university in or before 2022, your student loan system won’t be substantially changing.
How it works will depend on when you started university and which country you live in.
5. Make banks fight for your student account
Banks love students because they hope you’ll remain a customer for life.
That’s not a good idea – but Martin recommends getting the most you possibly can out of a student account.
Top offers at some of the student bank accounts this year include a £1,500 0% overdraft, or a free four-year railcard.
6. How to budget
A simple maxim for working people is ‘don’t spend more than you earn’ – but how do you know how much you actually earn as a student?
Martin recommends combining your student loan, any grants, money from parents, and any income from a job as your income – and not including your overdraft in the total.
7. Sort out your household – TV licence, council tax, and insurance
You may not need to pay for home or contents insurance, as you might be covered by your parents’ policies.
You also might be able to avoid paying the licence fee, as there is a student loophole.
Students are exempt from paying council tax, but you have to tell the council that you’re a student to avoid the bills arriving.
8. Make the most of student discounts
There are loads of discount and loyalty schemes out there for students, to help you save a bit of cash.
Martin recommends a few offers, including six months of free Amazon Prime, £10 off £75 at Ikea, free Microsoft Office, and 10% off Apple products, which should help kit out your student flat.
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