Student debt - what you need to know
Nowadays, going through university without taking on some form of debt - whether
it's a tuition fee loan or a credit card debt - is nigh on impossible.
Your tuition fees, the cost of living, all that socialising - it all adds up,
and you can find yourself leaving university in a bit of a financial mess if
you're not careful.
Sure, you might have thought you could use the money you earn from your
part-time job each month to repay your unsecured debts… but don't forget, you've
still got to pay for all your living expenses - and once these have been
deducted from your budget, you might not have enough to cover your debt
If you're one of the thousands of students out there who has taken on debt to
fund their studies/living costs, how should you go about repaying it?
Repaying the debt you take on at universityThe most common debts (apart from actual Student Loans) students take on while
studying for their degree(s) are:
- Personal loans
- Credit cards
- Store cards
If you have taken out a personal loan, you'll probably want to repay this as
soon as possible. The debt you have taken on, whether it was to help with your
bills or food, will be accumulating interest - and the longer you leave it
there, the more your debt will grow.
Repaying your personal loan is as simple as making monthly payments towards
it. As long as you can afford that and you're not worried about what it'll
cost you in terms of interest, just keep on making those payments until it's
However, if you find you can afford to pay more than you are required to each
month, you probably should do - as this will help you repay your debt more
quickly and pay less interest over the term of the loan. Just make sure you
won't be subject to any 'early repayment charges' before you do this.
If you have a credit card, the repayment process is simple. You will receive
your statement each month, and you'll be required to repay a minimum amount.
You can, however, repay the entire balance in one go if you can afford it. If
you do, you can save yourself a lot of money in interest charges as you won’t
pay any interest on the debt.
As a general rule of thumb, you shouldn't spend on your credit card unless you
are certain you'll be able to repay it before the interest starts building up.
Credit card debt tends to accumulate interest pretty rapidly, and if you don't
keep on to of it, you could be left with some unmanageable debts before you
Store cards are similar to credit cards in that they allow you to buy now and
pay later. However, if you don't repay the debt fast enough, you'll probably
be charged a higher rate of interest - so you'll see your debt grow pretty
When out shopping, you're often offered a discount or a 'free item from the
sale rack' if you take out a store card today - which sounds pretty tempting.
However, it's vital that you think about the long-term consequences before you
Again, if you're carrying store card debt, you shouldn't make just the minimum
payments, as this will probably cost you a lot more than you expected in the
long run. Whenever possible, try to clear the whole debt in one go.
If you've entered your overdraft while at university, this needn't be a
problem - providing it was authorised and interest-free, and providing you're
not worried about the size of the debt.
If your overdraft does charge you interest, you should aim to get out of it as
soon as possible. And even if your overdraft is interest free, you should
still aim to repay this as soon as you can.
If you have several debts make sure you make overpayments to the debt with the
highest interest rate first followed by the next highest.
Struggling to repay the debt you have taken on while at university?If you have taken on debt while at university, and you're worried about
repaying it, you should seek professional debt advice as soon as you can.
The sooner you seek advice, the sooner your problem can be addressed… and the
sooner you can start working on clearing your debts.
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