Banking and Student Debt
Tips for students
In this article I am going to outline some of the problems students encounter whilst studying, once they obtain their qualification, and also debt problems young people in general find themselves in. I was inspired to write this hub because I was a student myself and had to survive some financial stumbling blocks along with friends of my own who have similar problems. Referring to the title of the hub, I would like to outline some problems I see with banks marketing strategies and how you can avoid being bamboozled by your 'friendly' advisor.
To begin with I will start by telling the story of when I first entered university at the age of 21. I had recieved my student grant from the student loans company and this was to cover my tuition fees, rent, equipment, food etc. I managed fine with this and didnt go over board with the partying, being away from home at beautiful Swansea was fun enough for me. However, by the end of the year my old computer I had taken with me decided to conk-out. My parents advised me to talk to the bank about their student loans, Royal bank of Scotland who i was with said I could have upto 1500 pounds. This was perfect studying graphic design, I went straight out with my friend to PC world and bought myself a new iMac G4 for around a grand.
Just like a friend of mine who studies sound engineering, I was excited about giving my life some direction and didnt know about the realities of finding work once I had graduated. My friend has bank loans after graduating this year and now realises why I was desperately trying to save while he was still partying. I have had numerous job interviews for companies requiring a studio graphic designer, but most of them require extra skills which we were not taught such as printing operatives. I have managed to create a portfolio of freelance work, although companies ask questions like ' why do you want to change from freelance work' and demand work experience which graduates do not have.
My friend now has a temporary job at a next clothing store while he looks for a sound engineering job, I don't know how hard he is looking but he told me he now doubts his plan of a career in it. I have done a quick search for sound engineering jobs on the internet and many came up blank or just small jobs such as recording bands. He also told me he is trying to arrange a appointment for a credit card from his bank.
I was rather lucky when I finished my studies because I was'nt in the recession, but it was tough at first because I could'nt find any type of job at first. I got messed around when going for freelance graphic design jobs, one restaurant owner didnt want my design skills and only wanted my knowledge of search engine optimization, while I later found out he used one of those pre-layout website programs. I applied everywhere for at least a part-time job while I built my portfolio and enquired at a second-hand PC restoration business. This allowed me to gain more experience of computer hardware/software on the market and I managed to pay off nearly all of my bank loan. In hindsight, I would have tried harder to save before I went to university or fit in a part-time job whilst there is better than having the burden afterwards.
You may be tempted by bank offers of graduate loan add-ons such as extra 500 pounds or to take out a credit card. It is a shock leaving the partying life style, no money for gigs, drinks, cinema nights and the ladies don't flock to you now your broke. The bank advised me that having a credit card would make my credit rating better and I didn't need to use it, obviously they just wanted to place temptation in my hands. Eventually an 'emergency' came along and my parents suggested using it, this added an extra 6 months of struggling installments being taken from my regular account. I guess maybe you could call all this just a learning experience but I know some people never learn from these 'ideals' that they are convinced by banking sales-persons, so I am just sharing my wisdom. Don't forget credit cards quickly accumulate interest and most student loans give you 3 years before they pile on heavy interest, this time will fly-by.
Another thing my bank 'financial advisor' told me was not to pay my debts off in small amounts because it would affect my credit rating and I would have trouble getting a mortgage etc. I don't think this is particularly relevant to a graduate student because you aren't going to be looking to buy a house until your earning decent money anyway. They try all the tricks in the book to keep you in debt or add more onto your plate, just concentrate on getting straight.
Little things you may not think are important when applying for a bank account, such as these benefits packages they flaunt at freshers week. They offer mobile phone insurance, travel discounts, festival tickets and free ipods, but then you then find yourself wondering why another 7.50 is being deducted from your account when you leave education.
Its not as many wild carefree parties from now on guys, it took me 2 years to get totally straight, I no longer even have a small fall back overdraft. All the money I earn from freelancing and administrative work is mine, and I have a seperate savings bank account. When I was free of the student loan and credit card I did have a small 300 pound overdraft which was supposed to be for emergencies, although the bank manager said it was for me to spend on 'ebay' or whatever I wanted. I suggest getting online banking so you can track exactly whats coming out, it only takes 2 minutes at your bank website.