Yet this misperception is common – most people are 20 years out of date with how student finance works. So let me give you permission now to ignore anyone who tells you “neither a borrower nor a lender be.” It simply isn’t feasible. You’re going to need to borrow, so the key is to do it the right way (see my guide to student finance for more on that).
More pressing though is the need to curb the line that students are ‘overspending’. This infuriates me, it’s so trite; what exactly are students supposed to be ‘spending over’?
In the working world we say “don’t spend more than you earn”. Yet this wisdom doesn’t apply to students, since they don’t earn (or not very much anyway). The problem is that no one ever delineates exactly what is permissible spending and what isn’t. Why do we expect students to budget well, when the rest of the population doesn’t, and people set illegitimate bounds?
Now don’t get me wrong; budgeting is crucial, but lets start by being sensible and defining what’s allowed. This is my rule of thumb; add up any earnings from work, any regular income from parents, and your student finance package (loans/the new grants for some), and that’s your income. This is the amount you shouldn’t spend more than – you can use your 0% overdraft if and when it’s needed, but this is the amount you budget on.
Start spending more than that and you’re going to find the ‘bad debts’ (from commercial lenders) building, and then I’ll accuse you of overspending; but going into your student loan isn’t bad – its necessary. So ignore the chiming calls of those who don’t understand the system, and start to try and balance the books yourself.
Related links
moneysavingexpert.com