10 ways to help your child save money while studying
University can be an expensive time and with three-quarters of universities now charging the maximum £9,000 a year in tuition fees, it has never been more important to help your child manage their finances.
Give your kids the best chance of graduating university with a firm grasp of money matters, as well as a degree, with our 10 top tips for getting your child financially prepared for further education.
- For information on student finance, including loans, make sure to read Student finances 2016/17: what you need to know.
1. Talk about it
Start by having a frank conversation about money – how much they'll have to spend, how often they'll get it and what they'll be responsible for paying.
It's important to be candid about personal finances, so discuss everything relevant you can think of – including the cost of getting it wrong. While a university education is about learning far more than can be taught in any classroom, the last thing you want your kids to learn about first-hand are the horrors of debt, poor credit history or even payday loans.
Instead, you want them to firmly grasp their finances and free them from the burden of worrying about money. More than 80% of students admitted to having money worries on their mind while at university, according to 2016's National Student Money Survey by SavetheStudent.org. Of them, 56% admitted that it affected their studies and 65% said it had an impact on their eating habits.
So show your child how to budget as this will help them resist the temptation to celebrate with a big blow-out when their loan cash comes in.
Charlotte Burns, editor of Studentmoneysaver.co.uk, says: "You need to go through their income (such as their student loan, grants and any savings), then take off their essential outgoings (tuition fees, rent, bills, travel and food) and show them what is left (which probably won't be much) for clothes and socialising.
"If you can get them to understand just how little money they have to play with before they get hold of their overdraft and the loan goes into the account, they won't blindly get through their money in a few weeks."
2. Get appy
There's a vast array of clever, and free, money-related apps available to download, which are perfect for your tech-mad offspring. We're sure they'll already be familiar with the likes of free instant message and chat apps WhatsApp, Skype and FaceTime, that let them talk and text for free but they're just the tip of the money-saving iceberg.
Apps such as mySuperMarket let them input their grocery list to find out which supermarket is selling items cheapest and Splitwise works out how much each diner owes towards the bill when eating out. And don't forget to make sure they download a banking app – most of which come with the ability to transfer money easily and securely as well as letting them check their balance any time of day or night.
Some paid-for apps can prove very worthwhile too, such as the £1.99 parking app Nosey Parker that rounds up all locally available free car parking.
3. Extra help
If money is tight, then there is extra help at hand. Ruth Bushi, editor at Savethestudent.org, says that many students miss out because they don't know what help exists: "It's worth reviewing what extra cash is available each year from student finance to bursaries, grants and scholarships. There's a lot of assistance that goes unclaimed because people don't know it's there."
Your child may be eligible for a tuition fee loan, maintenance loan, maintenance grant or special support loan, as part of the government's student finance services.
The student finance calculator is a good place to start (Gov.uk/student-finance-calculator) as it helps you estimate based on your family's household income.
Nearly all universities and colleges offer bursaries and scholarships – extra money to help with the cost of further education. These are paid annually by individual universities and colleges and are in addition to any student loan or grant – plus your child won't have to pay them back.
The application criteria vary between institutions but it's often linked to family income or academic success. Local government and non-profit organisations can also offer bursaries, often linked to course selection. For instance, the Care Council for Wales offers a £2,500 annual bursary for social work students who ordinarily reside in Wales.
4. Council tax discounts
In almost all cases, full-time students do not need to pay council tax. While those living in university halls of residence don't have to worry about this at all, those living in privately run accommodation will need to apply for an exemption certificate, which they can do online at Gov.uk/apply-for-council-tax-discount.
It becomes tricky if they live with someone who isn't a full-time student, as this means the property will not be exempt from council tax. However, whoever is liable to pay the bill might qualify for a discount.
5. TV Licence
You need a TV licence to watch or record live TV programmes – that is, while they are being broadcast – whether you're watching on a TV, computer, laptop, tablet or mobile – and students aren't exempt.
If they live in halls of residence or a house that specifies each bedroom as a separately occupied location, then they will need their own TV licence. If it's just one address then they can split the cost of the licence.
Remember that you'll also need a TV licence to watch BBC iPlayer. If, however, you only watch catch-up services other than BBC iPlayer, you don't need a TV licence.
If your kids do purchase a TV licence at the start of the academic year and then decide to move back home for the duration of the summer holidays, they can claim a discount for the remaining three months, currently worth £36.
Students can apply for their refund at Tvlicensing.co.uk/students or over the phone on 0300 790 6113.
6. Feel the heat
Despite some tenancy contracts stating otherwise, landlords and letting management agencies cannot stop tenants from switching energy suppliers. If living in private accommodation, your child and their housemates should shop around by using our comparison tool to find the best deals.
It's unlikely that they'll have any previous bills to use for comparison but they could ask the landlord to get an estimate from the previous tenants, as well as details of the current supplier. What they should really focus on is finding the cheapest unit cost per kilowatt hour (kWh) available.
The very cheapest deals on the market are generally fixed-rate deals for a minimum of one or two years. While these might not be suitable if your child doesn't know where or with whom they'll be living one year to the next, some deals can be 'ported' when customers move home. However, there can still be significant savings to be made by switching, even if the move isn't to the very cheapest fixed-rate deal.
7. Look for secondhand books
While each term's reading list may very well include the latest editions of a particular professor's book, past editions change hands for a lot less money and the updated sections can usually be photocopied from the university library's copy of the new release.
Instead, of shelling out for every brand new book, encourage your child to check out the student union shop and their department's notice board for pre-owned copies that sell for a fraction of their original price. They can also scour eBay or Amazon to pick up copies from previous students from other universities.
CourseSmart.co.uk will loan you an e-version of a textbook for 360 days for up to 50% less than buying the text new.
8. Don't forget about discounts
Remind your offspring to always ask for a student discount when they buy anything. Most retails will give discounts, of up to 25%, for those with a student card.
Studentmoneysaver.co.uk and Savethestudent.org list all the latest discounts. And if you're thinking about getting your child a parting gift before they head to uni, then you might want to consider buying them an NUS Extra card – it costs just £12 and gets them discounts online and in store for a year with more than 160 retailers.
9. Home insurance
Getting cover for a student house or shared accommodation can be tricky and expensive. This is because insurers view insuring a person, not a house, as higher risk.
However, there are some ways around it, as Chloe French, spokesperson for Direct Line home insurance, says: "Parents should check to see if their existing home insurance policy will cover their children's contents when away at university before they invest in additional, potentially unnecessary cover. If not, they should see if they can add the cover on to their existing policy or weigh up the difference in cost between buying standalone student cover versus switching to an insurer that will include cover for their child's contents, too".
- Use our comparison tool to find the best home insurance for you.
For example, Direct Line provides cover under its standard home insurance policy while students are in full-time education, as long as they reside at their parents' address during term breaks. The maximum level of cover provided is £5,000. There is a single item limit of £2,000 for any one valuable.
Endsleigh specialises in cover for students, is recommended by the National Union of Students and won Best Provider for Contents Insurance at the Moneywise Customer Service Awards 2016. However, you also should do a contents insurance comparison to make sure you are getting value for money. TopCashback.co.uk won Most Trusted Insurance Comparison Site at the Moneywise Customer Service Awards 2016, with Comparethemarket.com being highly commended.
Parents could help reduce the cost by adding cover for student children as an optional extra to their own contents insurance.
If they live in shared accommodation, then they'll need to be vigilant about locking their doors as they won't be covered for theft unless entry is forced.
10. Student Railcard
A 16-25 Railcard is valid for full-time students of any age and cuts a third off the cost of travelling by train. Cards cost £30 a year, or £70 for three years, and can be bought from rail stations or Railcard.co.uk. Santander currently gives new 123 Student Current Account holders who pay in £500 a term a four-year railcard, worth £100, as a freebie.
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.