Studying debt management

Student debt guide provided by Think Money, one of the UK's largest and longest established providers of financial products and advice.

Whatever they're studying, most of today's students are likely to come out of university knowing quite a lot about debt.

The most recent Sodexo University Lifestyle Survey reveals some alarming figures about students and debt - like the fact that half of the UK's 1.3 million full-time undergraduates expect to graduate with £15,000 or more of debt, while a full 28% think they'll leave university owing more than £20,000.

What's more, nearly half of the 30% who've considered 'dropping out' cited financial difficulties as a reason they might do so.

And, as NUS (National Union of Students) president Wes Streeting pointed out, those all-time high levels of debt have to be seen against the backdrop of a world where graduate job prospects are at an all-time low - something which is bound to make it even harder for graduates to make progress clearing those debts.

Not all of the debt, of course, will be in the form of Student Loans.

For many students, overdrafts, credit cards and personal loans will make up a fair proportion of the debt they'll be carrying when they graduate.

In other words, they won't have the security of knowing they'll only have to repay their debts when they can afford to (i.e. when they're earning £15,000 a year or more - as the current rules for Student Loans stipulate) or at a rate they should be able to afford.

Which makes good debt management all the more important.

For anyone juggling that kind of debt, finding a way of keeping it under control is crucial - and for people who are just starting out on their career, it's likely to be difficult too.

Some graduates might find high-paying jobs straight away, but that hardly goes for everyone with a degree to their name.

Those who do find a job, of course, are likely to be in a much better position when it comes to clearing their debts.

As long as they can afford their monthly repayments, it's a question of 'sticking with it': making those payments and slowly watching the total go down.

In many cases, they'd be well advised to overpay their debts by as much as they can afford - a good way of cutting down the total amount they'll end up paying in interest as well as bringing forward the day they'll be debt-free.

But others might be unable to find a job that pays enough - or even a job of any kind.

For someone in that situation, their Student Loan might not be an immediate problem, as they won't have to start repaying it until they're earning enough, but their other debts could easily turn into a much bigger problem than they'd expected - a lot faster than they'd expected.

Unless they find a way to deal with this, they're facing the risk of fines, escalating interest, damage to their credit rating and legal action by their lenders.

Whatever their situation, there's no 'one-size-fits-all' solution to debt, but a good way to start is to contact a professional debt adviser, explain their situation and ask for some advice on the best way forward.

Depending on their circumstances, they may find that the best way of clearing their 'commercial' debts (i.e. the debts that didn't come from the Student Loans Company) is some kind of professional debt solution, like a debt management plan.

Again, there's no single solution to debt problems, so it's important to talk to a debt adviser and find out what they recommend before committing to anything.