A quick Twitter search of ‘#StudentFinance’ says a lot about the current state of personal finance for those at university and those about to join it.
Have a peak.
We do not know all the mitigating circumstances but beyond the rants and relief there appears to be an unbalanced attitude towards money and misconceptions about what things like student loans and bursaries are supposed to do.
Is this anything new?
Young people struggle to manage their money just like adults do. Probably not. However, the margins today are much thinner and it seems here, we are somewhat beyond the usual student money matters of suffering ‘beans on toast’ for a week or two.
With scarce employment and high living costs, many are seeing their loans evaporate the second they receive it on basic essentials like rent and food. Why are so many students seemingly hanging on, resorting to an under pressure Bank of Mum and Dad and what is behind the warped perception of ‘free money’?
What makes the difference?
Some students work. We find Sixth Formers opting out of work immediately, unaware that just a weekend job earns on average up to £3,000. Others simply have no work-life balance choice to make, they have to work.
It’s tough to recover. Once the overdraft is dipped into, it invariably ceases to be a justin case and more of a necessity. Those first few months money is flying around at a rate you have never experienced before, with all sorts of deals and contracts hurled in your direction. Just 30 minutes a month planning your spending saves on average £1,500.
Attitudes to debt. There is no longer any ‘shame’ to debt, according to a recent survey.
Personal debt in the UK stands at £1.5 trillion, £4,235 in unsecured debt per person and despite higher tuition fees, UCAS applications have not significantly trailed off.
The 9% drop across income brackets has shown that the £27,000 price tag has not proved to be a deterrent.
The terms of repayment, lower amounts over a longer period of time, also plays a factor in ‘normalising debt’. By the time children reach the age of 17 more than half of them are, or have been in the red.
Living in arrears – a buy now, pay later society. The proliferation of quick, easy, short-term or payday lending has also played a role in detoxifying the notion of borrowing your way out of trouble. Stats from the Government’s Insolvency Service, said 25 to 35-year olds now account for one in four Debt Relief Orders, more than any other age group.
Education. Currently, the chance to clear up these misconceptions is limited in the classroom and when it is raised, teachers are not equipped with all the answers.
Since we started delivering pre-university money management workshops in 2009, demand from schools and Leaving Care Teams has doubled year-on-year.
How important is it that you are moving out of home? What are the average costs of living? What’s a TV licence going to set you back? Did you know you’ll spend £310 on books? What/how/when will you have to pay back? These are the things you need to know to make an informed choice and cope with the decisions you make.
Various studies by the FSA, and more recently Wesleyan Assurance Society showed teachers were not confident teaching finance education and were themselves less savvy with their money than peers in other professions.
The unchecked danger
Money is the number one stress factor; it can affect your studies as well as your work and with young people the risks are higher – amassing debt and getting into bad financial habits is something no first year student needs or new graduate wants.
Sixth Formers say manageing their finance is there biggest fear at collage and university, second only to exams.
Most of us have learnt the hard way, young people today can’t afford to – you might think the #StudentFinance Tweets are gobsmacking but sadly for us, it is as surprising as a pot noodle.