Survey shows students unaware of overdraft conditions
Don't have time for the newspapers? No problemo! Here's this week's compact round up of the student money news you're probably better off knowing about.
The Student Finance Survey 2012 which we conducted earlier this year reveals a severe lack of personal finance education in the UK. 68% of students who responded said they are worried about having to repay thousands of pounds in student overdrafts borrowed from banks.
Most students rely on bank overdrafts to supplement the growing cost of higher education. Without such a facility, 45% of students surveyed claim that they would not have attended university at all.
But shockingly, half of students are unaware of their repayment conditions. Banks typically require students to repay a large proportion of their overdraft within a year of graduating to avoid high interest charges. Students need to pay close attention to the small print and choose their bank carefully.
A final year student said:
“I hadn’t realised that I have just a year to pay back my full £3,000 overdraft, until I got a letter from my bank a few weeks before graduation. New students should apply with caution.”
The online survey by student money website Save the Student! highlights the severe lack of financial education for young people. This is in spite of them being increasingly driven into debt through significantly higher tuition fees in the midst of an ongoing recession.
The problem is further compounded by confusion surrounding the new student finance system in this country, which has already put off some bright students from poorer backgrounds from applying for university at all.
Owen Burek, founder of Save the Student!, argues:
“If students are now expected to take on in excess of £40,000 of debt for their university education, then they should rightly expect to be better educated about both personal and student finance to maximise the life choices they have to make. They don’t teach this stuff in schools. What we are doing at Save the Student! will go some way to correcting the balance.”
In response to the changes to our university education system, the team of students and graduates at Save the Student! have written The Essential Student Guide to Finance for 2012.
The free 80-page eBook provides the 540,000 new students heading off to university this year with all the important financial information and advice that they need in one publication. Topics include budgeting, student finance and funding, student banking, understanding debt and lots of money saving tips and tricks. The writers are confident that the information in the book can reduce the debt of some students by £7,000 a year.
The Essential Student Guide to Finance is available to students for free download from: http://www.savethestudent.org/books/student-finance
- Survey statistics are taken from the Save the Student! student finance survey 2012. Sample size was 2,219 university students in the UK between 8-18 May 2012.
- Student bank account figures: