Welcome to the real world

You've celebrated your exam results, now you need to work out how to make ends meet at college. Helen Monks offers some wise tips CONGRATULATIONS - you've got the grades, now you can look forward to one of the most fun periods of your life. And debts up to your eyeballs.

Before you pack your trunk, you need to organise your finances. Research from NatWest shows that half of all sixth-formers not opting for university blame the prospect of leaving with average debts of pounds 10,000 for their decision.

But the Careers Services Unit says a graduate in their twenties earns pounds 6,000 a year more than non-graduates, so it's still an investment worth making.

Before you go anywhere, choose the right bank. Banks are all too aware of the higher earning potential of graduates and spend millions luring students into opening accounts, with bribes ranging from free railcards, CDs and electrical goods to plain oldfashioned cash.

But think about what you'll need beyond Fresher's Week - like the biggest interest-free overdraft you can find. While HSBC (www.hsbc.co.uk) will try to tempt you with pounds 50 or a free four- year railcard, it only offers a pounds 1,000 interest-free overdraft in the first year, compared to Lloyds TSB (www.lloydstsb.com), which offers up to pounds 1,500 interest-free.

The pounds 60-worth of freebies offered by NatWest ( www.

natwest.com) aren't the only reason why you might check out its account.

While it offers a smaller interest-free overdraft than Lloyds TSB, at pounds 1,250 in the first year, it will give you access to a student bank manager.

Establish a good relationship with him or her and you are more likely to get guidance and flexibility throughout your course and after you graduate.

Look carefully for tie-ins. You may want to switch to a more competitive current account when you start earning in future.

If you have to borrow, student loans (www.slc.co.uk) are the most competitive you'll ever have, so get one. Anyone on a fulltime course can apply, and each college has a representative.

Interest is charged at around the same rate as inflation and you don't start paying it back until you start earning. The maximum loan for first-year students is pounds 3,905 outside London, pounds 4,815 in the capital.

Avoid personal loans - even the lowest rates will be about four times more than your student loan, at eight to nine per cent. They also typically demand immediate repayment.

Running up debts on credit cards is tempting, but hazardous - students may find it hard to get accepted by low-rate cards and struggle to make monthly repayments.

Failing to make payments can inflict lasting damage to your credit rating and may affect your ability to borrow, say for a mortgage, years later.

If you must borrow on credit cards, don't just accept the one your bank might offer - they charge among the highest rates, at up to 19 per cent APR.

Anything below 13 per cent is worth considering, but you can pay a rock-bottom rate if you shift your balance to cards with introductory offers.

Egg (www.

egg.com) currently offers 0 per cent until February 2003.

Store cards charge up to 30 per cent APR - don't even think about them.

ACCOMMODATION will be your greatest expense. Living in subsidised halls for as long as you can will save cash, but if this isn't possible, make sure your landlord or agent is universityapproved, to minimise the chances of them holding on to your deposit for no reason.

Shop for food in a group - bulk-buying is much cheaper, but make sure you aren't paying your new best friend's way on every Tesco trip.

If you are able to earn, either during term or holidays, make sure you don't have to fill in a P38(s) form to prevent tax being deducted from your wages.

Check your payslip and doublecheck with your boss.

Although one in four students are victims of crime and few will be able to afford to replace their possessions, don't buy insurance unnecessarily.

There's a good chance that your stuff is covered by your parents' home and contents insurance. Check with them.

If you aren't covered adequately, it could be worth the extra annual premium. A typical Exeter student, for example, with pounds 3,000 worth of cover, including pounds 1,000 of computer cover, will pay just pounds 95 for the whole year if they go through Endsleigh Insurance (www.endsleigh.co.uk).

If you get in trouble, deal with it quickly. Solving your cash crisis probably won't require radical action if you deal with the problem early enough.

Amy Brown, spokesman for the Consumer Credit Counselling Service, says: "Communicating with your bank and creditors is essential - they can often be more flexible than you think."

For independent expert advice, try the National Debt Line, 0808 808 4000 (www.nationaldebtline.

co.uk), the Consumer Credit Counselling Service (CCCS), 0800 138 1111, or the Consumer Advice Bureaux (CAB).

Copyright 2002
Provided by ProQuest Information and Learning Company. All rights Reserved.