Press Room

New Students Expect to Pay £26,000 For University Education
(10 August 2004)

With A-Level results on the horizon, the 2004 NatWest Student Money Matters Survey reveals that sixth formers are already expecting to graduate with debts of nearly £13,000. This average anticipated debt is steadily rising year on year, up £3,800 from 2003. This year's freshers also believe that they will have to find £950.32 a month to cover essentials such as rent, food, books, beer and cigarettes, which means that they will require £26,000 to cover university expenses over a three-year degree.

The actual cost of a three-year degree offers little relief for anxious sixth formers and their parents. According to spending figures given to NatWest by those already at university, the actual cost will equate to £23,787 once three years of tuition fees (currently £1,125 per year) are added on.

Graduate Debt Still On The Up

For those who have finished university, the average graduate debt has risen by £4,055 since 2003 to £12,180 and a third believe it will take them more than 10 years to pay off, an increase of 13% on those surveyed last year. 59% of graduates (up from 31% in 2003) left university with debts of over £10,000.

Ann-Marie Blake, Head of Student and Graduate Banking at NatWest, said: "The good news for graduates however is that this year's average starting salary is up 7% to £13,600 (£12,659 in 2003), which proves that the cost of university is clearly an investment in your future earning potential. What's more, since graduating 41% claim to have gained a good career and independence from their parents and 30% have invested in their own property and claim to have a healthier bank balance.

"Going to university is also about gaining life experience and standing on your own two feet, whether it be financially or simply by moving away from home."

Working Necessary To Fund University

Not surprisingly, over three quarters of school leavers starting university this year are worried about potential living costs and the prospect of debt. Nearly two thirds also believe that they are not adequately prepared to manage their finances.

However, school leavers looking to start university this September are realistic about the cost of university, with an overwhelming 84% prepared to roll up their sleeves and get a part time job to help get by. The average sixth former believes that they will have to work 15 hours a week, although 15% believe that they will have to work over 20 hours in order to survive at university.

The reality for those already at university is slightly different from school leavers expectations. Only 35% of undergraduates have a part time job to help them get by, an 18% fall from 2003. That said, however, the average student is now taking home £4,000 a year from part time work. For those who do have a part time job, three-quarters believe that they will not be able to afford university and pay tuition fees without the extra income. Unfortunately, this pressure to earn money does have a real impact on studies, as nearly half (45%) of those in part time jobs admit to skipping lectures to turn up for work, and over a fifth (22%) have considered dropping out of university to make their part time job a full time one.

A quarter of students receive regular money from their parents to support them through university and a similar amount get money from their parents as and when they need it. A growing proportion however (34%) do not receive any help from their parents at all.

Good News - Grads Getting On Housing Ladder

However, despite rising costs and debts, 41% of recent graduates claim to have gained a good career and independence from their parents - 30% have bought their own place and 28% have a healthier bank balance. Nearly a fifth of recent graduates also report that they have managed to start saving money since they finished university.

Ann-Marie Blake said: "Although the thought of graduating with debt can seem daunting, a university education gives you a great footing for your future career. More and more employers are specifying a degree level qualification before they will even consider a candidate for a role and employees without a degree can often face a glass ceiling. The value of a university education should never be underestimated."

NatWest has dedicated student and graduate banking managers in place to help advise school leavers, students and graduates worried about their immediate finances and how best to manage any possible debt at university.

They have put together the following tips for school leavers and students about to graduate on how to try and avoid the debt trap while at university:

NatWest Tips for School Leavers
Top Ten Tips to Try and Avoid the Debt Trap

  • Think about staying in university accommodation for as long as possible - it can be cheaper than renting privately.
  • Make travelling home cheaper with a 5-Year Young Persons Railcard free from NatWest when you open a student account.
  • Shop for food with friends - buying in bulk can save money and lets you take advantage of 'buy one get one free' offers.
  • Claim discounts. Make sure you use your NUS or ISIC card and also look in your Student Union for one-off deals.
  • If you do work, check whether you have to fill in a form P38(S) so that tax will not be taken off your earnings.
  • Ask other students how much you will need to pay for bills. Complete a budget planner and regularly review it to see where your money is being spent and if it is deviating from the budget.
  • Record all transactions as you spend them so that there are no surprises when your bank statement arrives.
  • Work out how much you can afford to spend per week and draw it out on a set day rather than keep visiting the cash machine for a tenner here and a tenner there. If you do the latter, it can quickly build up and take you to your financial limit.
  • If you do find yourself struggling, talk to your bank as soon as possible - don't sweep cash problems under the carpet.
  • Finally, it's easier said than done, but don't run up a massive debt in the first couple of months. Going out every night in the first term may make you popular but could mean a serious lack of social life later in the year.

Notes to editors

Ann Marie Blake, NatWest Head of Student and Graduate Banking, is available for interview. Case studies are also available on request.

  • Research carried out by Virtual Surveys Limited between 24th May and 9th June.
  • 1,008 Graduates, 1,091 Students and 1,045 sixth formers were surveyed

For further advice on preparing for university, visit www.natwest.com/students

Enquiries to:
Media Relations
Tel: 020 7672 1931