Dealing with student debt 

Where to go for help if you're struggling with your finances

Most money related conversations while at uni focus on your student loan. While its a debt of sorts, there’s other more serious debts you could take on as a student that can have dire consequences if used incorrectly. This guide talks you through what debt is, how to budget and where to get help if you find yourself in debt.

If you're struggling to make the payments on credit cards or loans as well as paying your rent and buying food, you may need debt help.

Step 1: Your student loan isn't really a debt - so check if you can increase it


In the simplest terms, debt is money you borrow that you're expected to pay back. That's why calling your student loan a debt doesn't quite work - as not everyone who borrows the money will pay it back.

You don't need the cash to pay for uni upfront. Most students will take out a loan to cover tuition fees and living costs - which can be £60,000+.

Sounds like a scary amount, and that's why some people don't take on the full amount of loan they're entitled to - worried it's a large debt they'll need to pay back.

But the important thing is, you only repay the money when you earn over a certain amount - currently over £25,000 on new plan 5 student loans. If you never earn over this amount then you won't pay a penny.

So, if you're struggling financially at uni, before you take on any other forms of possibly much more expensive borrowing, if you decided not to take on the maximum loan entitlement when you were offered it - check if you can increase your loan entitlement first. You can often do this mid-way through the academic year and it's the best form of 'borrowing' available to you. For more see Martin's 6 need-to-knows about 'Plan 5' English student finance for all the info.

But your student loan is the only form of borrowing while at uni that behaves like this. In all other instances you WILL be expected to pay back what you borrowed - sometimes with interest on top - meaning you'll owe even more money than you initially borrowed. 

Check if you're entitled to any grants 

As grants don't need to be repaid, you've got nothing to lose checking if you're entitled to any. They are usually offered based on low household income, background or personal circumstances, for example disabled students, students from particular regions or countries and are offered by charities or trusts that represent underrepresented groups.

Try sites such as Turn2UsThe Scholarship Hub and Crowd Scholar, but also go back to your uni and see if they can point you in the right direction, as there may be local funding available by area.

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Step 2: Still struggling to make ends meet? Check if there’s a hidden parental contribution


If you're struggling to get by at uni on your maintenance loan, it may be because your parents haven't plugged the hidden parental contribution. 

For most under-25s the amount of maintenance loan you get is means-tested based on annual family income – the higher the income, the lower the loan.

The loan amount starts reducing with family income of just £25,000 a year – and many parents are unaware that the system implies that they should make up the shortfall, which can be £1,000s. 

So if you're struggling to get by on your maintenance loan, you may need to have a discussion with your parents to explain the situation and see if they can help you out further financially. 

For full info on what this means and how it works in practice, see our Student loans in England guide, plus use our Parental Contribution Calculator to work out the proportion of the maximum loan you can expect. 

Even the parental contribution top-up mightn't be enough

Even if no parental contribution applies because you're getting the max maintenance loan, or your parents are already topping you up to fill the gap - it might not still be enough to live off. That's because the sad reality is that living loans haven't gone up in line with inflation in a number of years.

In fact, overall, since 2021 student living loans have been running around 11% behind inflation. For more on this read our news story.

Step 3: Take control of your incomings and outgoings


Probably the best way to avoid needing to use things such as credit cards or an overdraft in the first place, is to have a decent budget in place. This should be a top priority before you even get to uni. 

There are three stages to working out your budget:

  1. Look at how much cash you'll have coming in at the start of, and during, the term. This will include things such as; your student loan, any money from grants, scholarships or bursaries, any money from parents, part-time jobs, or savings.

  2. Realistically work out how much money you'll have going out on bills or other committed spending during the term. This will be unique to each individual, but outgoings will be things such as tuition fees, accommodation, household bills, travel, food, clothes subscriptions etc.  

  3. Then subtract your outgoings from your income and divide it by the number of weeks in the term. This gives you an idea of how much you've left to live off week by week.

Crucially, DON'T spend more than this. For full info on how to put together a decent budget and more, see the Student budgeting planner guide

If you're really struggling and you're able to find something that fits in with your course, you could consider getting a job to boost your income, either part-time during term-time, or in the holidays.

If you think you're already in debt, it's important to really try and curb any unnecessary spending. Easier said than done we know, but there are so many areas where you could potentially save money by stopping spending, that could help get you back on track. 

Are you grabbing a coffee EVERY day on the way into lectures? Simple expenses like that can REALLY rack up. The Demotivator tool is a fun/scary way to show you just how much you spend on non-essentials. Give it a try and see if you could start saving. 

There's potentially lots of areas where you could make instant savings. Some things are clearly easier to cut back on than others, but we've got a whole How to stop spending guide to help you get started. 

Step 4: Still really need to borrow? There’s good borrowing and bad borrowing


It would be wrong to suggest that borrowing and debt is always a bad thing. But debt is like fire - use it correctly and it can be a useful tool, make one tiny mistake and you can be horrendously burnt.

For instance, it can be good to make purchases on a credit card that you pay off in full each month to help get a good credit rating, which in turn could help in the future for getting a mortgage (yet another form of borrowing!).

However, spend on a credit card with no plan of how you are going to make the repayments and the interest will stack up and have the complete opposite effect on your credit score - adversely affecting your chances of being a homeowner in the future for instance and being able to get other forms of credit. 

If you've more than one debt, it can be difficult to know which to focus on paying off first. But it's really important to get this right, or you risk increasing your debt further.

If you've multiple debts, write a list of what you owe, then see which costs the most, including interest and any fees.

If your credit card is the most expensive for example, make minimum payments on other debts to focus incoming cash on your credit card. Once the most expensive debt is cleared, you're ready to tackle the next, and so on.

Debt you could take on as a student

  • Credit cards - Credit cards are quite simple - they let you pay for things. Bur rather than the money coming straight out of your bank account, the credit card company pays for whatever you're buying and sends you the bill to pay them back at the end of each month. Pay off in full and you pay no interest - the ideal way to use a credit card.

    Some credit cards have special 0% interest deals, but if the one you use doesn't, then any money you don't pay off at the end of the month will be carried over to the next month and you'll be charged interest on that whole amount until you pay it off. Keep rolling it over month on month and not paying off, and obviously the interest will start to mount up.

    Used correctly credit cards can be a good thing, giving you extra protection on larger purchases and helping you boost your credit score. But, if you're already struggling with debt and don't think you'll be able to make the minimum repayments, it can wreck your credit score for years and stop you being eligible for other forms of borrowing.

    If you are going to get a credit card, you'll need to pass a credit check first. This lets the lender work out how 'risky' you are to lend to, and takes into account your income and other financial commitments. It can then either accept or decline you. Therefore before applying blind, it's far better to use an eligibility checker to check your chances of acceptance before applying, which searches multiple card providers and shows how likely you are to get each card.

    There's lots you need to know about how credit cards work, the different sorts you can get and how to use them properly, so for all you need to know read the How do credit cards work? guide
  • Overdraft - it's safe to say most students get an overdraft (where the bank lets you spend more than you've got at no extra cost up to a set amount) - especially as they're offered with most student bank accounts. The priority is to get the biggest and longest 0% overdraft you can.

    However, be wary of applying for the maximum overdraft possible just because you can. If you budget well you may only need it as a buffer, and the smaller your overdraft, the less likely you are to get caught in a dangerous spending spiral. Remember the bank is just lending you this money. It'll need to be paid back, so don't get too comfortable. Always keep in your mind that it's not actually yours, it's the bank's.

    The limit the bank agrees is known as an 'arranged overdraft', so is an amount it's happy for you to borrow. However, certain banks won't stop you from spending if you reach that, and you will instead then be borrowing from an 'unarranged overdraft'. You won't usually be charged for using this, though it can wreak havoc with your credit rating and ability to get cheap credit in the future as it can appear you're unable to manage your account well. For more on overdrafts, see the Student bank accounts guide
  • Payday loan - these are a financial nightmare, and you should avoid them entirely. They're designed to tide you over for a few months (or sooner if you can pay back the balance plus interest) and are for smaller amounts, usually between £100 and £1,000.

    However, importantly, there are so many other things to try before you need to resort to getting a payday loan, it's all set out for you in our Short-term and payday loans guide, so take a look at that before you set anything into motion. 
  • Buy Now, Pay Later - millions of people use Buy Now, Pay Later (BNPL) firms such as Klarna, Clearpay and Laybuy when shopping online or in store. Managed correctly, they can be a cheap and quick way of accessing credit. But importantly it is still a debt and if something goes wrong, you face late fees and, increasingly, marks on your credit file.

    Also importantly, BNPL is currently an unregulated sector, meaning it lacks some vital consumer safeguards.

    If you're unsure whether using BNPL is a good idea, you can think about the following three questions:

    - Would I have bought this item in the first place if BNPL wasn't an option?
    - Am I sure I can meet the repayments?
    - Is BNPL the best form of borrowing out there for me?

    If the answer to any of these questions is 'no', then don't use BNPL. We've got all you need to know in our Buy now, pay later: how it works and what to look out for guide, so take a read before you make a purchase.
  • Loans - if you need to make a big one off purchase, such as buying a car for travel while at uni, you might consider a personal loan. Also known as unsecured loans, these are where you borrow a sum of money from a lender, and agree to pay it back over a set time period in fixed monthly repayments.

    The lender will charge you interest as its fee to lend money to you, so you repay the amount you borrowed plus interest. The advantage is you get cash upfront, but can spread the cost of a purchase over several months or years. But you need to know that you will have the money to pay it back, or the interest will rack up.

    So, if you do think you definitely need to take a loan, the formula's simple: borrow as little as possible, repay as quickly as possible. To avoid complications, always base your borrowing on what you can comfortably afford to repay (preferably after doing a budget), as borrowing too much can cause debts to spiral out of control.

    And beware – while borrowing over a longer period spreads the debt and decreases monthly repayments, it massively increases the interest you'll repay. Borrow £10,000 at 7% over three years and the interest cost is £1,100. Borrow the same over 10 years, and you'll pay a massive £3,900 in interest.

    There's a lot to know about loans, so take a read of our full guide on How to get a personal loan, before you do anything. 
  • What is a credit score and how does it work?

    A credit score provides a snapshot of your financial history. It can shine a light on how you might appear to companies when you're applying for credit. 

    As a general rule, the higher your credit score, the lower risk you appear to potential lenders (and the better chance you have of being accepted for products such as credit cardsmortgages and loans).

    A high credit score suggests that you've handled money and credit responsibly in the past – and are likely to continue to do so in the future.

    Credit ratings are calculated using information held by the three main credit reference agencies: Equifax, Experian and TransUnion.

    Credit reference agencies collect and hold financial information about every adult in the UK, which can be used by companies when they need to check your credit history. The agencies take into account how often you apply for credit, how much you currently owe, and whether you've been able to keep up with your payments. 

    For more on credit scores and things that can adversely effect it, see the What is a good credit score? guide

Step 5: Where to get help if you still need it


If your borrowing is getting out of control and you're struggling to meet even the most basic outgoings such as rent and food, you could try going to your student union. They are likely to be able to offer free advice on any financial support options available to you, such as hardship funds. Try using the Student Minds search tool to find where to get support at your university.

Access to learning fund (hardship fund)

Access to learning funds are for students who face unexpected financial hardship with their costs of living. Any money you receive from the fund can't, however, be used to pay for tuition fees. Contact your uni to find out the best way to apply, as each one will be different. As will the criteria on which they place priority of who receives the money. 

As part of the process you will usually need to be able to supply the following (though each uni will ask for specific evidence accordingly):

  • Most recent bank statements from the last three months 
  • Payslips from any job your might have 
  • Proof of any outstanding debts, like credit card statements 
  • Housing utility bills if applicable
  • Anything else you think might support you application

Free help from charities

If you've already taken out any of the debt we've outlined in this guide and you've got yourself into a difficult situation, firstly don't panic, there is always help out there. The most important thing is to get help and advice from any of the FREE debt help charities out there - do not pay a company even more money to try and get back on track. 

Citizens Advice, StepChange and National Debtline are all great free places to turn to, but we have a whole guide on Debt problems and help available to help you first assess how serious your debt problem is and then point you in the right direction of where to get help.

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