THE BLOG

Student Finance 101

31/07/2014 16:19 BST | Updated 29/09/2014 10:59 BST

The mere mention of 'student finance' amongst my friends usually results in about a 75-15% split between gnashing of teeth and head-hanging or a carefree, Quixotic rallying cry of 'it's an adventure, don't stress!' and 'buy now, pay much later'. I'm somewhere in the middle and try not to lose myself in the at times hyperbolic commentary that surrounds the issue. With students facing ever increasing debt, be it in the raising of university tuition rates in the UK, the proposed changes to interest rates on preexisting student debt in Australia (which would operate retrospectively, see here) or the widening gap between those who can even afford a college degree in the United States and those who seemingly never will, it pays to have some financial acumen.

To borrow rapper Iggy Azalea's phrase, when it comes to money for students, your mantra should be 'get my money on time' and, come hell or high water, don't 'worry 'bout no haters, gotta stay on my grind'. The 'grind' in question, be it college, university or part time work whilst studying. The reality is that education is one of the few tried and tested methods by which individuals can further and better themselves and or improve their situation beyond that of their birth. Every year, students take on increasing levels of debt through student loans to finance this dream with the goal to finding a profession or career that is sustaining both intellectually and financially. The problem lies in the fact that the amount required to do so is also increasing.

So what can students do to alleviate or at least mitigate these burdensome, high levels of debt and not be crushed by the sheer prospect of it? Some students, probably a little less than my 75% sample, act reasonably rationally and focus on building their resumes and gaining experience in between part time jobs and study. Others, the 15%, prefer not to think about it. However, thanks to Dickens' 'old pagan God', compound interest, it does pay to keep an eye on your finances. Academics have stated again and again in behavioural economic theory that we are really far less rational than assumed and our 'irrational behaviour' can often be systematic and predictable (for a good summary, see Dan Ariely, Predictably Irrational, 2010). Young adults' approach to money can often appear to be systemically irrational so the earlier you can start developing some basic financial skills the better.

The following tips might just help you out when it comes to that sticky, awkward time between payday and creditor knocking on your door day:

Firstly, always pay your debts as and when they fall due. If you just can't, try entering into a repayment plan or put aside some of your income each week to pay down the debt, thus reducing the amount of interest you will pay. Often students think that by putting off payments they are saving money but this is a fallacy and usually results in a higher repayment later on.

Second, when considering a big purchase or new contract, always ask if there is a student rate (never leave home without your concession card!) and keep an eye out for specials. Make a night of it and bring friends along to 'Tight-Arse Tuesday' movie nights for example. Further, see your reduced ability to eat out as a reason to learn how to cook and as a great excuse to invite people over to share a meal and hopefully a few glasses of wine (just don't buy cask wine, please, pool your money if you have to).

Third, try to keep your Internet (vital for any student) expenses down by using free Wifi or your college's Internet and avoid costly download fees.

Finally, and most importantly, despite the many issues surrounding them, get to know your bank - intimately. Favour electronic and automatic services and for God's sake let them know you're a student and have your account fees waived if you don't already have a basic, current account. When travelling, make one big withdrawal and reduce the charges and if you're a bit of a profligate son, or daughter, consider removing the overdraft option on your account. Sometimes this costs a bit more but if you tend to go over, it can save you money in the long term.

Hopefully some of these tips will help you become a bit more budget conscious at a time when you can afford to make mistakes. Yes, student debt looms large, but if you try and see it as a means to an end and work hard to get those placements, internships or paid summer jobs, your education will ensure you go on to a more successful, lucrative and ultimately more enjoyable career. Revel in your low-income (and low-tax) bracket for now because in a few years you will probably look back upon these years as some of the best.