Author: Jerry Mulle
With September just around the corner, both new and returning students will be starting to prepare for their year ahead at university. And while they’ll no doubt be more concerned with plans surrounding their studies and social life, financial management plays a huge part in student life.#Digital #finance technologies help ensure student money management is transparent Click To Tweet
For a lot of students, university is the first time they have independence – both socially and financially. Managing money is something relatively new and unfamiliar, and with the first few months at university being particularly money-intensive, they can struggle. In fact, the Institute of Inertia claimed that one in ten students will spend over £2,700 of their loan in the first fortnight of university. The first hurdle is ‘Freshers Week’: a full seven days of little sleep and food, and more often than not, too much partying – all of which racks up the bills.
To get by, our recent research reveals that a significant proportion of students with a maintenance loan now rely on additional sources of income to get through the term, with two thirds (65 per cent) turning to parents or other family members in times of need. Others rely on their student overdrafts (58 per cent), dip into their savings (27 per cent), incur further debts on credit cards (6 per cent), or even take out payday loans (9 per cent) to help tide them over. This is in addition to the £32,220 debt that the average UK student graduates with, plummeting them into an endless spiral of repayment.
It’s no surprise, then, that the effects of this debt have been found to be more wide reaching than just financially. Our research found that three quarters (75 per cent) of students feel stressed about the amount of debt they are accumulating while studying, impacting various areas of their lives including relationships (35 per cent), friendships (34 per cent), and exam results (32 per cent).
Given the extensive impact debt can have on students’ lives, it’s perhaps now up to banks and other student organisations to work together to provide them with the digital tools they need to help keep on top of their finances. Apps and other digital finance technologies help ensure student money management is transparent, providing them with visibility over their finances. What’s more, students are demanding this assistance, with just over a third (34 per cent) stating their banks could do more to help with money management. In addition, over two thirds (66 per cent) say their debt would be less stressful if their banks offered access to digital money management tools or apps to help them manage their maintenance loan incomings and outgoings.
The fact is that, some ten years on from the financial crash, we’re still sending vulnerable young graduates into the world burdened with debt and lacking the necessary skills to manage their finances in a healthy way. More needs to be done to equip them earlier with the tools to avoid unnecessary debt, and then to enable them to lead the fulfilling lives they go to university to achieve, without the stress of debt hanging over them.