The Student Loans Company (SLC) administers student finance on behalf of the UK government, and has now completed the majority of the Maintenance Loan payments to students across the UK, with more to be paid to students starting courses in the upcoming weeks. So far, 1.1 million students have been paid.
The SLC has processed an increased number of applications for the third year in a row. Over £2.6 billion has been paid out to students in the first term of the 22/23 academic year. This guide aims to give suggestions to students who are thinking about how they should spend their maintenance loan this term.
Set up a nest egg
Keep track of your day-to-day spending, but keep a small pot of money unspent just in case you need it for something big and unexpected. Often students might have an unexpected piece of equipment to buy, such as a replacement lab coat or a new textbook. Social events can also surprise you with unexpected extra costs.
In a worst-case scenario, this nest egg goes unspent and you can use the money for something nice, like a trip, or a meal out.
Keep on top of your overdraft
Many students opt for student overdrafts to allow them a bit of padding when their loan begins to run out at the end of the semester. This can seem like a great, useful option due to its interest-free offers, but keep an eye on it, as the interest rates can increase when you graduate.
Check the rates of your student overdraft when you graduate. It might not be the best option for everyone, so if you do choose it, make sure you are doing so from an informed position.
Focus on the essentials
When getting your first glimpse of financial freedom, it can be very easy to get too excited by this sudden lump of cash sitting in your account. According to Rosca, a finance optimisation tool, they explain that ‘many students spend it recklessly and end the semester struggling to buy basic necessities without going to their overdrafts.’
After your first couple of weeks at university, see how much you spent on weekly activities such as buying your groceries and going out. Exclude one-off purchases such as kitchen utensils or bedding in this calculation. By multiplying your weekly basic outgoings by the number of weeks you have remaining in your semester, you can have an idea of a weekly budget.
Consider rent
Sometimes the payments from your student loan do not always coincide perfectly with your rental payments to your landlord. This means that many students will have to prioritise using their maintenance loan to pay for rent before they start thinking about using it for groceries or subscriptions.
If you are renting from a private landlord, it can be worth having this discussion with them. Often they might be able to have some flexibility with the monthly repayment dates if you explain to them about your maintenance loan. Your landlord should be able to take this into consideration when drawing up your rental contract.
