Financial planning for graduates

	Rate (AER)	Interest Free Buffer
A & L	0.00%	£1
A & L	0.00%	£1
Barclays	9.90%	£1
Citibank	13.90%	£1
Barclays	17.90%	£1
* Based on £2000 Overdrawn and is a limited guide to the market

Graduates are finishing their courses with debts now averaging £13,000 to £15,000 on student loans, overdrafts, credit cards and loans from parents, a figure that has been going up by around 12% a year and is likely to rise even faster following the near tripling of tuition fees to £3,000 a year in September 2006. Advanced studies on financial management would appear to be called for!

Figures released by the Student Loans Company show total lending to British students in the year to April was £3.4 billion, up from £2.9 billion the previous year. The figures are the first since universities were allowed to charge tuition fees of £3,000 - up from the £1,250 charged to those entering before last September. The National Union of Students (NUS) now estimates that it costs as much as £15,000 a year to study in London and £13,000 elsewhere although the figures are disputed.

Gemma Tumelty, NUS president, said "Debt does not only affect students' choices before they enter university, it affects the courses they choose, the career they take on, the likelihood of them pursuing further study and their chances to save and invest as graduates."

Hello world, I've got a BA (or BSc or MA, etc., etc...)

So, you're leaving Uni with your degree certificate in one hand and bank statement in the deepest shade of red in the other. What do you do?

To get your finances on the right track the first thing you need is write a budget. List everything you owe and all your living costs. If you are working, you need to deduct all outgoings for each month from your total income so you can work out exactly how much spare cash you have left for repaying debts.

Shop around for the best

Just as you shopped around when looking at student bank accounts (you did, didn't you?), now you have a degree you can switch to get the best deal on graduate accounts. The banks are always keen to attract graduates because they expect them to be good earners in the future.

The banks will consider you for a graduate account up to three years after you have graduated. Don't necessarily take the first one that comes along. You need to compare the products available in the marketplace. Don't even think about incentives such as discounts at shops and restaurants you'll probably never use - you're in the business world now and it's the figures that count.

15 July 2008 © Moneyextra.com

back

Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.