Student debt - what you need to know

Before you started university, the chances are, you will have received an endless amount of letters offering you the latest 'low-interest loans' and overdraft facilities - all of which would lead to you being in debt.

It is fact that most students can't go to university without taking on some form of debt - whether it is a tuition fee loan, or a credit card.

However, which debts should you be worried about? Should you actually be worried about any of your debts? Here, I'll take a look at some of the different forms of credit available for students, and whether you should be concerned about them.

Student loan from the Student Loans Company

This loan is one you shouldn't get worried about just yet (compared with other forms of credit, anyway). You will only begin repaying this when you are earning £15,000 or more. Your loan is designed to help you through your degree, providing you with the money you may need for rent, food and travel costs, and so on.

Student overdrafts

If your overdraft is interest free, then you don't need to worry about it (just yet) - unless you have 'maxed' it out.

Your bank will let you know when you are required to repay your overdraft - and will also let you know if any changes are going to take place to your account, so you will always be 'in the know' about where you stand, and how much money you owe.

In general, overdrafts should be kept for emergency use only - so you shouldn't really be buying gadgets and takeaways using your overdraft!

However, some people may use their student overdraft to buy a car, for example, and this might be a good idea, in some cases, providing they can pay it back.

Credit cards

Credit cards can be a good way of spreading costs, but only if you can afford to repay the balance at the end of the month. They often come with fairly high interest rates, which means if you take on debt using a credit card, you will pay a lot of interest if you fail to repay the balance.

In general, students should avoid credit cards at all costs. However, if you are planning on taking one out, you should assess your financial situation beforehand and think about whether you will be able to afford the repayments each month.