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Start swotting up on #student accounts

student loan debtAssuming your child has passed enough exams to get a place somewhere, even if it’s not the first choice, you’ll be spending some of the holidays getting to grips with a whole new project: paying through university or college.

It's mainly about loans and finding them. Once you've exhausted your quota at the government's Student Loans Company, your next port of call is likely to be the bank. Your little Einstein may already have an account but it pays to look around at what else is on offer. Crazily, many banks are happy to lend as much as £3,000 to students at zero per cent during their course. Provided your child doesn’t blow it all partying, that’s a great boost to covering living costs.

There are only about 10 student accounts to choose from so look for which bank offers the longest and lowest interest-free overdraft facility. Some freebies can be attractive. Santander, for example, offers a four-year railcard, saving a third off UK travel. But low-cost borrowing might be much more useful than £50 off a lap-top in the long term.

Figuring out what is actually available isn’t as easy as you think. The banks don’t display that information in a standard way. Some operate a yearly limit on the cash while others state a three-year deal. Most importantly, check that the amount of the overdraft is guaranteed and not stated as ‘up to’ a certain level. The latter means your level of agreed overdraft is dependent on credit scores and you may not be eligible for the headline amount advertised.

Speaking of credit scores, how do you get your child a decent one if they have no credit history from paying gas bills and so on? A top tip is to put them on the electoral role from the age of 18 so at least they have a registered address.

Much as this all sounds like free money, it isn’t. You must stick within the overdraft or face a raft of charges and whacking interest on the money you shouldn’t have spent. If there’s a problem, contact the bank and sort it out immediately. Don’t suffer in silence, it will cost more in the end.

Confused? SMM has a quick guide to it all here. Also, for a short cut, Money Saving Expert has picked Co-op and Nationwide as the best accounts currently and has a comparison tool here. However, keep an eye on for any new deals coming onstream as term-time approaches. Happy budgeting!

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Monday, 10 December 2018