Students can expect to pay the following whilst attending University according to government figures:
£4,125 per year in course costs (such as tuition fees)
£6,897 per year in living costs (including basic living requirements, household costs, course and non-course related costs such as travel and entertainment)
In the last year of their studies the average student debt figure was calculated at £8.666 in 2004. Three years later that amount is estimated to have shot up to an average of £15.000.
Once a student graduates, they then have to begin repaying that debt. There's no guarantee however that recently graduated students will get a job straightaway, add to this various other impending financial responsibilities - rent, loan repayments, even a mortgage and paying back debt could seem a daunting prospect.
Graduates should consider setting up a meeting with their personal banker or account manager. At this meeting they should be able to discuss their current situation, their future prospects and plans, and hopefully arrange a repayment plan that won't have to much of an adverse effect on their quality of life and should allow them pursue their career, at the same time as paying off their student loan and any other debts.
In the event of the bank not offering a repayment plan that seems affordable then graduates should consider other measures.
Graduates should consider getting a credit report from one of the credit watching organisations such as Experian or Equifax. This is information any consumer has a legal right to.
A credit rating is a score awarded to a consumer, reflecting their financial history and considers factors such as a person's track record in making repayments on loans, meeting bill payments and paying off debts.
This score is used by potential lenders to assess whether the consumer is high or low risk. Consumers proven to be high-risk stand a greater chance of being refused financial products like loans, credit cards and mortgages. Even in the event of a successful application there is a good chance they will have to pay higher interest rates.
If the graduate has credit card debts on their credit score, they are entitled to offer their version of events, which may hold sway with certain loan applications in the future.
Graduates should also keep in mind that being in some form of employment will probably cause banks to view them more favourably and may even agree to another meeting to arrive at a positive resolution for the situation. While this may put immediate career plans on hold, again, it does have a beneficial effect on the graduate's credit rating.
The other route available is to take a further loan to pay off the existing one. However, this may be harder than it seems with the affected credit score having an effect of its own; lenders may not be so enthusiastic to offer a loan to someone who, apparently, has little or no means of meeting repayments. If you are approved however a number of banks such as Natwest Loans offer very competitive graduate loans.
If you do decide to take out a further loan it's important to consider whether you can realistically afford to keep up payments. You can generally find loan calculators on lenders websites, the RBS loans or the Asda Personal Loans websites for instance. Motley Fool offers useful advice and an impartial Loans comparison.
Graduates should also ensure they’re getting the best possible deal on their current account. The big attraction of graduate accounts is their interest free overdraft facilities, in some cases up to £2,000 in the first year after graduation. Essentially graduates should be looking for the highest Interest free overdraft and shouldn’t be afraid to shop around. Some banks offer much better deals than others so graduates shouldn’t hesitate in switching to a different bank if theirs isn’t competitive. Currently the best deals available appears to be the RBS graduate current account which offers £2000 interest free for the first year with year two and three at £1500 and £1000 respectively.