Uk personal debt loan

Many can remember the uncomfortable charade of working out a preliminary budget on the back of an envelope before setting off to university. Save for the organised few, it's a vague science of guesswork. Rent--[pounds sterling]200 a month. Food -- [pounds sterling]80. Books (surveying reading list) -- [pounds sterling]10? Or [pounds sterling]100? Socialising -- who knows? Few school leavers can accurately predict what self-sufficient university life is really going to cost, having never paid a bill or pushed a trolley around Sainsbury's in their life.

Such ignorance of microeconomic management is no longer excusable in an 18-year-old. Students are expected to have the forecasting ability of Gordon Brown coupled with the analytical skills of an investments adviser. Prospective students must make two financial decisions. Will investing in a degree deliver a sufficient increase in prosperity? And can they support themselves through three years at university?

Unfortunately, misunderstanding reigns in schools and sixth-form colleges, where these crucial decisions are made. Two features of school students' perception of debt now emerge from a new study, Attitudes to Debt, published by Universities UK. Claire Callendar, professor of social policy at South Bank University, questioned 2,000 school leavers and further education students about university finance, and found them worryingly misinformed. They overestimated the level of debt they would graduate with, and underestimated the expenditure and income they would have at university.

This problem of perception risks blighting government initiatives to attract students from poorer families to university. Ignorance of finance among school leavers could be easily countered, Professor Callendar suggests, through better education programmes in schools. Both a lack of money and concerns about accumulating debts were mentioned by more than half of the undecided students; that figure rose to three-quarters among the lowest social classes.

Yet although students will be better off than they predict, they will still be far from comfortably off. The government limits student loans to [pounds sterling]3,905 (outside London) even though the National Union of Students estimates average student living and studying costs to be [pounds sterling]7,313. For many undecided applicants, the figures simply do not add up. How to address this chronic shortfall is a significant turn-off, regardless of how students regard the long-term investment picture.

Last year, the NUS was branded "irresponsible" by the Department for Education and Skills for pointing out that in weekly budget terms, young people were financially better off on the dole than on student support. Using an "after housing costs" measure of inequality, student weekly income was calculated as just [pounds sterling]34.85 outside London, compared with the [pounds sterling]42.70 jobseekers' allowance.

Debt-averse students, found by Professor Callendar to be prevalent among low income families, were intending to opt for term-time employment to avoid accumulating debt. The only alternative for those with no financial support from parents is to take up thousands of pounds of commercial credit at high interest rates.

Part-time work has become the norm even for students who take on full loans. According to the Unite/MORI Student Living Survey 2003, 41 per cent of students now have part-time jobs. Although 57 per cent work for a bit of extra cash, an equal proportion said they must work to find money for the essentials.

Two in five students said that they were seriously worried about the debts they would incur at university. This response was more common among students at newer universities and among those from lower-income backgrounds.

"Once again, social class appears to be a discriminator in terms of students' financial situation," says Professor Callendar. She refers to the Unite/MORI Student Living Survey of 2002.

Dropping Out: a study of early leavers from higher education, recently published by the DfES, noted that 18 per cent of university drop outs blame financial problems. The student funding lobby has now welcomed Charles Clarke's pledge, when presenting the higher education white paper, "to review the level of the maintenance loan and operation of the parental means test for loans as part of the next spending review". This review will take place over the coming year, and may result in loans that reflect differential living costs across the country.

Mandy Telford, the NUS national president, concludes: "NUS welcomes the return of the maintenance grant, but a paltry [pounds sterling]1,000 a year is not going to stop students being forced to stack shelves or flip burgers to pay the rent. NUS is calling for a grant to cover half the cost of living for students from the poorest backgrounds and the rest to be met by the student loan."