How to handle your student loan
The overwhelming financial problem I faced (and still face) at university is that great thing, that fountain in the sky that is both a blessing and a curse: the student loan payment.
The problem is, those smart fellows at the Student Loans Company decide the best way to handle your loan is to dollop out a huge lump sum at the start of term and then say to you, “There you go. Come back in four months and you can have another one.”
This often leads to a few weeks of luxury at the start of the term, as you enjoy your new-found wealth, followed by two or three weeks of spartan, hermit living at the end of term when you’re broke. Following that, there’s a swift phone call home to get your parents to lend you money so you can afford to get the train home for christmas (that actually happened to me – and I had to borrow a pound off my flatmate so I could afford to get the bus down to the train station).
But have no fear, students of the UK, because I have a solution.
Firstly, I’ve set up a savings account for my student loan payment to go into, which it does automatically at the start of term. I’m with Natwest and do pretty much all of my banking online, so it was really easy for me to set up an e-savings account, which gives me instant access to my money, and I can transfer it across all my accounts online in about 2 seconds
Then I set up regular payments from my e-savings account into my current account every sunday, essentially paying myself a weekly wage. Of this weekly wage, a small amount (say, 10-15% of it) is diverted into a second e-savings account every friday, to give me a cushion for the end of term. I set this up once (it took about 2 minutes) and now it’s a regular thing that I don’t even think about.
This means that I’m paying myself a weekly wage out of my student loan, held in one account (which I call my “holding account” – its only purpose is to hold onto my loan). Then out of that wage I’m putting aside 10% a week, just like I’d try to save if I had a proper job. If needs be, I can dip into these savings at the end of term if I’m struggling for cash.
Simple. This means it’s quite hard to overspend, although it’s still possible, what with my overdraft etc. But this is the best way I’ve found of handling your student loan and trying to even out your consumption over the whole term, rather than living like Elton John for the first 5 weeks of term and living like a crazy homeless guy for the last 5 weeks.
