The real world can be an expensive place to live

'Graduates are tempted by what seems like a good offer, and will use the money to buy extras like a stereo'

'This Life', it is not. By comparison with the cult TV series' graphic portrayal of serial sex, drink-and-drugs binges and, maybe, a little work, real life for Britain's recent crop of graduates can seem much tamer. What they have in common, however, is debt, a hangover from their student days. Samantha Downes asks whether banks really care.

The move from student life to one of work can mean one giant- sized hangover for each summer's new crop of college graduates. Paying back huge overdrafts incurred as a student can mean that the first few years' adjustment to a life of work is not always the exciting experience it ought to be.

The introduction of student loans in 1990 placed a wholegeneration of students into further debt. Seven years later the average graduate leaves university owing around pounds 4,000.

From 1998, the mountain of debt looks set to increase, following the abolition of the student grant and the Government's decision to charge all but the poorest students a pounds 1,000 teaching fee, repayable after graduation.

Moreover, the 300,000-plus students who graduated this year can hardly expect to start on mega-bucks. A Barclays survey in March showed the average starting salary to be pounds 11,749 for female graduates and pounds 13,660 for males.

The expenses associated with starting a new job can put a graduate in even more debt. A National Westminster Bank spokesman says "destudentisation" can place many graduates in financial shock. "Having to buy a new suit, and having to suddenly pay more for things, even going out, all add up to additional expenses," he says.

Although they admit to a penchant for the odd bottle of wine or three, these up-and-coming young professionals from south London admit it is their debts which are giving them the worst post-graduate hangover. Key to achieving a good relationship with their bank managers is a willingness to discuss every financial move with their branch, both as students and afterwards.

Mark James, a trainee solicitor in London's West End, owes around pounds 4,500, a combination of a student loan, overdraft and credit card bills.

However, the 25-year-old, who graduated in French and law from Cardiff University in 1994, avoided excessive bank charges by letting his bank know when he was in financial difficulty. "I have had an account with the Royal Bank of Scotland since I was 15," he says. "I made sure I kept them informed of my financial situation and [they] would increase my overdraft as necessary."

Caroline Soames, 24, re-thought her choice of course when she was unable to get funding for a social science degree. Last year she finished a two- year HND course in television operations in Newcastle and now works as a technical operator with a satellite TV channel.

Like Mark, Caroline, who only received a grant during the second year of her course, kept her bank notified of potential problems. But although she has paid off her overdraft, Caroline still has an outstanding pounds 1,000 student loan.

Sue Privett, 22, took the same course. Her fees and living expenses were paid for by her parents. She now has an pounds 800 interest-free overdraft, but is not too concerned at her ability to pay it off. "Generally I did not really live beyond any means," she says.

Working in the summer holidays or studying for a degree which offers one-year work experience as part of the course helps. Simon Salwan, 24, is a trainee trader in the City of London. He finished his first degree, a BSc in Computer Studies, debt free.

He admits he is lucky to have started his new job with a debt of just pounds 900. "I did an internship with IBM and I saved some money from that. All I have now is an overdraft," he says. "I had some savings which enabled me to pay for expenses like a deposit on a house and new suits. I was quite careful when I was a student. I could have got into a lot more debt than I have."

The National Association of Citizen's Advice Bureaux (Nacab) warns graduates to borrow only what they need.

Stuart Davidson, from the Nacab money advice support unit, says: "They should sit down and make a budget. Graduates are often tempted by what seems like a good offer, and will use the money to buy extras like a stereo."

Nacab recommends that graduates consolidate their debts. "Running a loan and an overdraft is the slippery slope into more debt. Taking out a loan to absorb the overdraft should be considered."

One by-product of increasing competition for graduate customers, considered by banks to be potential high-flyers, is their willingness to offer packages that aim to get students over the first few years of post-graduation hardship. All the traditional high street banks offer cheap graduate loan facilities.

Barclays and Lloyds offer graduates a maximum loan of pounds 5,000, but be prepared to pay more interest if you want longer to pay the amount back. The Barclays loan is fixed at 9.9 per cent APR per annum and must be paid back over two years. Lloyds allows graduates five years but the interest is higher at 10.5 per cent APR per year.

Nat West offers a maximum loan of pounds 10,000, repayable at 8 per cent APR per year over seven years. Midland also offers a pounds 10,000 maximum loan, repayable over five years at 9.9 per cent APR.

If loans sound like too much of a commitment, another option is an interest- free overdraft. Lloyds allows up to pounds 750 for a year after graduation, while Barclays offers a pounds 1,500 facility. Midland offers a three-year pounds 3,000 interest-free overdraft.

Abbey National and Halifaxsay they are looking at the graduate market, but have no immediate plans to offer special loans or overdraft facilities.