The headlines and pictures of thousands of irate students lining the streets of London in protest will live long in infamy for many people. The Coalition Government’s decision to raise the maximum amount universities can charge for tuition fees to £9,000 sparked a furious reaction among young people and parents alike as thoughts immediately turned to how on Earth such astronomical levels of debt would be paid back. Having always been a hot topic, student loans are firmly back in the news.
There are, however, a number of different schools of thought as to how students can avoid accumulating mountains of debt. It all depends on the actions and decisions of the parents before their child’s university life begins. The University of Surrey is just one establishment suggesting an alternative.
The Guildford-based centre has been holding discussions with banks over student finance and has openly questioned whether the student loans, so beloved and heavily advertised by the Government, are the most financially viable option for many students and families. It suggests that a far more affordable method would be for parents to undertake private lending schemes. Examples of such schemes include re-mortgaging homes or taking out personal loans. The university suggests that using this method could achieve what is arguably the second aim of every graduate behind a good result: minimal debt.
At Surrey, this is a model that is widely used throughout the student body. Approximately one third of home undergraduates studying at Surrey do not take out a student loan. Instead, their families follow the alternative route of savings and/or re-mortgages to help their children avoid gathering large debts.
Proposals have been mooted to charge graduates extra fees for repaying loans early with lump sums or larger monthly payments. These suggestions have come in for, perhaps understandable, heavy criticism. It has been shown that low-earners are generally among those who wish to make earlier payments. Consequently, the charges are viewed as aggressive and, essentially, a tax on debt aversion.
The issue of student finance is both complex and multi-faceted. Potential students would do well to exercise caution when selecting a bank with which to open their student account. The overdraft facilities offered by many are not always helpful and can, in fact, be dangerous when it comes to keeping a cap on spending. As ever, it's worth taking the time to thoroughly research, read all the small print and find the best deal for you.
Credit cards are a further alternative to help students fund this most exciting period of their life but again caution must be exercised. Taking care now will avoid not only unmanageable and worrisome debts, but also prevent future credit history problems.
Research has shown that a feeling of ownership with regards to finance has increased with the advent of Internet banking. Research undertaken by Nationwide has shown that an increasing number of students feel that the accessibility that comes with managing finances online makes an often arduous task considerably easier.
Now that the rise in tuition fees is here to stay, the fear for many is that the majority of universities will take advantage of the ruling and charge the maximum amount possible for attendance on their courses. It is therefore understandable that a significant number of parents are desperately searching for alternative methods of putting their offspring through higher education. One way or another, a loan is the most likely outcome. Whether it should be a student or personal one is another matter.