Don't take it for granted

Make your money last beyond freshers' week. By Rachel Fixsen

Freedom is one of the best things about student life. Often away from home for the first time, you can party as late as you like, sometimes set your own timetable and choose how to spend your money. But getting mired in money problems spoils things.

As hundreds of thousands of former `A' level students prepare to sample college life, many are likely to walk a financial tightrope. Even in London, where grants are highest, they will only have just over pounds 4,200 of grant and loan a year to keep the wolf from the door. More than one in six students drop out of courses because of money problems.

"Being short of money can become all-encompassing to the extent that it affects your work and social life," says Lorna Fowlie, undergraduate at University College London. "People are always talking about it."

So getting as much help as you can with your money is essential if you are to make the most of university. Banks are vying for student custom, keen to get their hands on grant cheques and secure future high earners as clients.

Midland Bank offers one of the best deals for students in the coming academic year. Those who open a current account with Midland can have an interest-free overdraft of pounds 750 in their first year, pounds 1,000 in their second and pounds 1,250 in their third.

You also get pounds 50 cash or a four-year student railcard, and earn 2.25 per cent interest on any credit balances you are lucky enough to have.

Barclays has yet to give details of this year's student package, but last year it offered an interest-free overdraft of pounds 1,000 for year one, pounds 1,250 in the second year and pounds 1,500 in the third year of a course. It was handing out pounds 25 to students opening an account, with another pounds 25 for anyone who signed up for a Barclaycard as well. Credit interest was paid at 2 per cent.

Student loans are a fact of life for undergraduates without sponsorship or parents with the money and will to help them out. A full student grant for the first academic year is pounds 2,160 for those living in London in the coming year, and this can be supplemented with a student loan of up to pounds 2,085.

According to Barclays' latest survey, students' average debts have risen by a quarter this year to pounds 2,475, including pounds 453 of bank borrowings. But though students tend to be an educated bunch, their poor grasp of basic money management lies at the root of their problems, says NatWest.

School-leavers do not really understand the financial demands of university life. Only after graduation does it become clear to many students how much debt they have built up, it says.

"The major issue isn't how many free gifts banks have on offer but how you're going to help students look after their money," says NatWest.

The bank already invests pounds 1m in a schools money management programme, and is launching a guide to university life including advice on how to manage your finances.

NatWest's interest-free overdraft for students this year is a flat pounds 1,000 for the first three years, rising for the fourth and fifth years. It gives pounds 35 in cash to account openers and pays 2 per cent interest on credit balances.

Students can run into financial difficulties in many ways, the National Union of Students says. Some arrive at college only to find their grant cheque has not arrived. Budgets are often stretched when students find themselves having to move into expensive accommodation.

"If you do get a full grant, it might seem like a lot of money," an NUS spokeswoman says. "You go out quite a lot in freshers' week, and this can leave you stuck for the rest of the year."

If you do find yourself penniless, your first port of call should be your college or university welfare adviser. Access funds, one-off grants of up to pounds 500 for particularly hard-up students and administered by the college, may still be available.

A third of all students resort to working part-time. "Some part-time jobs can help your CV, but they're generally muck jobs," the NUS spokeswoman says. "Avoid late-night jobs in bars - and ones where you might miss lectures or tutorials."

Useful numbers for student accounts

Barclays Bank - 0800 400100

Lloyds Bank - 0800 147789

Midland Bank - 0800 180180

Co-operative Bank - 0345 252000

Bank of Scotland - 0500 313111

Royal Bank of Scotland - 0800 121121

TSB - via branches

Halifax - 01422 333333

National Westminster Bank - 0171-726 1000

First Trust Bank - 01232 325599