Today there is a special article for current students, it discusses questions to ask yourself before attending University from the perspective of a student based out of England! Maureen has been a loyal reader of Studenomics ever since the beginning and today I have granted her the opportunity of speaking her mind. Enough from me, it’s time to let Maureen take over.
I am a 20 year old student from England currently based in Germany. My home university is based in London and I have dealt with high living costs for two years. At present, I am in my penultimate year working abroad as part of my degree. Personal finance has been a passion of mine for the past four years and I am actively researching new ways to make my money work harder. At present, amidst the finance crisis, plunging of the Bank of England base rate in addition to the weakened Sterling, I am researching the benefits of Government Bonds and how to take advantage of earning in Euros.
Starting university is likely to be the first step you will take into the adult world. You may need to cook and do laundry for the first time as well as juggle your now very active social life. It can be an intimidating thought but is also excitedly anticipated by many in 6th form. Preparing for any milestone is a tough task in itself but with forward planning and a clear idea of what you want out of it you can ensure that it will be a learning experience. Here are five questions which you should ask yourself during your last year in 6th form to ensure that personal finances won’t deny you the chance to maximize your experience at University.
1. Do I need a student loan?
Debt is still considered a taboo in society. In today’s world, however, it’s virtually impossible to never take out a loan of some sort whether it be a mortgage, car loan or borrowing on a credit card. What is important to understand is the interest rates on these loans. An interest rate is the cost of borrowing an amount of money. The student loan interest rate is calculated in line with inflation therefore it is one of the cheapest that you have access to. My simple answer to this question is: Take out a student loan even if you don’t need the money. What you can do with this money is leave it in a high interest savings account and watch as it grows with compound interest. As long as you keep it in an account that is above the interest rate of the loan you are increasing your income in the long-term.
2. Will I have sufficient funds to cover all of my costs throughout the year?
It is really important to have a basic idea of living costs wherever you will study. This not only gives you a chance to compare and contrast accommodation posibilities but it will give you an idea of what needs to be covered by your funding at a basic level. Rent is almost always the biggest cost of University (aside from tuition fees) which makes it one of the most important decisions to make. Many Universities offer halls of residence which often work out cheaper and more convenient than private accommodation. The system for paying does differ but many halls request that payment of rent be made at the beginning of each semester. This is quite helpful because your student loan installments are also paid at the beginning of each semester. This helps you to recognize that what is left in the bank, after the rent has been paid, is yours to cover the other costs of living. If you already know that your loan will only cover the basic costs of living don’t get down about it. Take action and start looking for possible part-time work or better still start actively saving what you earn now. If you don’t want a job to interfere with your studies then ensure you work for at least a few weeks in the summer.
Many students who come from a family with a low income are also entitled to grants and bursaries. Do the research now to see what you could be entitled to.
If you know any current students it is helpful to ask them about it as they will be able to give you advice on what to expect in terms of living costs.
3. Should I take out insurance?
Many may say that you should always take out insurance because students nowadays have more items of worth than they did in the past. With the continuous upgrading of electronics students’ belongings have increased by a lot in worth. I took out student insurance in my first year but I was swayed by advertising. I am extremely careful with keys and locking up before I leave. I also don’t own very much that’s worth a lot of money. Taking this into account I regret my decision to take out insurance. There are a few unfortunate cases where people have had items stolen from their room in halls of residence. Yet today there are policies that cover room theft even if the door is left unlocked. These policies may be of use to those who are forgetful but they don’t make a difference to those, like myself, who always remember to lock the door. Choosing whether to take out insurance very much depends on the amount of expensive-to-replace items you own, on what floor you live (if you live eight floors up it’s highly unlikely that a burglar would go further than the second or third floor) and finally on the type of the person you are.
It’s also a very good idea to find out whether your halls of residence offer any types of cover inclusive of your rent.
If you know that your parents have home insurance then find out whether their policy can extend to your room at university. If not, it’s worth finding out whether a smaller premium can be paid in addition to cover you. This can work out cheaper than taking out a separate policy.
In my situation I was good at remembering to lock up, lived on the eighth floor furthest away from the lift and only had a laptop that may have been worth £400 at most (because I always had my iPod and mobile phone on my person). I took out insurance but if I were to redo university I wouldn’t.
4. Should I live at home/halls of residence/rented flat or house?
This is an important decision to make. It not only will play a significant role in your finances but it may affect the type of experience you have. University is described as an experience that you can enjoy, learn from and is perhaps the last bit of fun before you face the real world of work.
My advice is to weigh up the benefits that you will get from living at home (should the opportunity be there) or living away from home. The latter is inevitably more costly but you will learn a lot about living without parents. Going into halls of residence in first year also gives you a great opportunity to make friends and get support from peers.
Those considering going into privately rented accommodation are perhaps taking the biggest step and perhaps the one which is like baptism by fire. You will need to research tenancy rights, tenancy agreements and estate agent fees (if applicable). There is also the choice about who to live with. After one year in halls it is common to find housemates but if you start uni not knowing anyone then you need to do your own research to ensure you move into a flatshare that is safe and comfortable.
5. Do I need to work this summer to raise enough money for the start-up living costs?
Moving away from home and having to fend for yourself for the first time can be a daunting task. The best thing you can do to alleviate worries is to get organized. What do you need when you first get there? I have compiled a list which you can use to give you an idea of what costs you need to take into account.
* Primary literature (to read during the summer also)
* Basic stationery (folders, pens, notepads to take lecture notes)
* Deposit – whether you’re in halls or not you will need to be able to raise about a month’s rent as a deposit to cover any damages
* One month’s rent if you are going into private accommodation or rent for one semester (approx. 12 weeks) in halls of residence
* Tuition fees (if you are not taking out a tuition fees loan)
* Travel cards (depending on how far from campus you live)
* FRESHER’S EVENTS: a week to take advantage of meeting many new people and get a feel for university life. Events on offer usually range from school disco nights, comedy club nights and formal balls.
* Clubs & Societies – Universities have an array of clubs and societies. You will be able to find out more at your Fresher’s Fayre but if you have done your research in advance then you can work out rough costs. Membership is affordable but if you want to join more than one then it is worth working out how much money you may need.
With all of the answers to these questions in mind you will be able to start your experience with confidence. If you take on these challenges in your final year of secondary education then you should be proud of how financially responsible you are being already. This is a key skill to achieve during your years of University and having started so early with it can make a difference. Good Luck with your first semester and don’t forget to enjoy it!