How to manage student debt

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by: Jim Grayson
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Word Count: 369
Date: Sat, 20 Jun 2009 Time: 2:22 PM
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Whilst the average student debt in the UK for a new graduate is around £18,000 there is a huge variation in debt levels between students. Some people leave university owing nothing, whilst it is not unusual for some students to have debt levels of over £30,000. This difference does not necessarily related to relative levels of parental generosity though; what is just as important are how the individuals approach debt management.

In a recently reported case a brother and sister who attended university at the same time received identical allowances from their parents. This was paid to the sister on a monthly basis and to the brother it was paid weekly. On receiving a monthly lump sum the sister was tempted to spend it all at once and it rarely lasted for more than a few days. On the other hand, the brother eked out his money. On leaving university the brother was debt free whilst the sister owed over £30,000.

There is much that parents can do to help their children learn about how to handle money responsibly. For instance, even young children can be encouraged to save their pocket money and what they earn from casual jobs. They can also teach their children about how to budget and how to handle cash flow by documenting their income and outgoings. As indicated by the case reported above, it is probably easier to manage cash flow on a weekly rather than on a monthly basis. Credit cards are best avoided if at all possible and if they are used then they should have a low credit limit which is never exceeded. Parents can also impress on their children the importance of seeking help if they do find themselves getting in debts they can't handle. The earlier these problems are addresses the less severe they will be.

Whatever advice parents give their children, and however hard the children try to apply this advice, there will still be a large number who leave university with a heavy burden of debt. It is important that these graduates seek debt advice as soon as possible so that affordable repayment schemes are initiated.

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