Starting my working life with £45,000 university debt

Woman working on a desktop computer

With university tuition fees now costing up to £9,000 a year, Amy McDonnell explains what’s it like to start your adult life with thousands of pounds worth of debt.

By Amy McDonnell

I didn’t know much about university during my early to mid-teens. It wasn’t until I started sixth form that I considered attending. 

When my teachers introduced university and implored us to start thinking about our UCAS applications two months in, I already knew that I wanted a writing career. 

Although my parents weren’t convinced that magazine journalism was a ‘real’ degree (and still aren’t), they were supportive. 

But, with interest charged on student loans forecasted to rise up to £8.6 billion a year by 2024 1, it’s no wonder that students and parents alike are questioning whether going to university is worth the hefty price tag. 

Counting the cost

The National Union of Students, or NUS, calculated that accommodation, living costs and food, costs up to £12,160 a year 2, with the total price for a three-year course as much as £64,000. 

That’s not even including the up to £9,250 3 a year tuition fee. 

Those are frightening numbers to an 18-year-old who’s enjoyed free education for the last 13 years. 

My parents and I discussed the financial impact university would have. Initially, they had no idea how I’d pay for accommodation or whether a student loan would negatively impact my financial future. 

However, after some online research, they quickly learned about maintenance loans and realised that they're essentially an additional tax on your payslip. No bailiffs would be coming to knock down my door.

Working it out

After applying for my loan, I discovered that I was entitled to enough money to pay for my accommodation in full (hurrah!) with a couple of hundred left to spare. 

Still, it wasn’t enough to live on, and I had to continue working to cover food, laundry and, most importantly, socialising. I transferred to the Southampton branch of the retail store I worked at and earned around £400 a month, meaning I could buy food and go out a few times a week. 

It was sometimes irritating getting up at 6 am on a Saturday while my friends were fast asleep, nursing a hangover. However, working during university meant that I had a secure income, made different friends, and saved 25% on clothes thanks to my staff discount.   

My parents were also kind enough to give me £50 a month and pay my phone bill to alleviate further financial burdens.  

Think over overdrafts

Most of the top banks offer student bank accounts with attractive loans of up to £2,000 with 0% interest. This is along with other incentives such as 2-4-1 entertainment products and discounted or free travel cards.

A lot of my university friends didn’t work and relied solely on overdrafts to fund their lifestyle. I think it’s a common misconception that students need an overdraft to survive university, yet 49% of students use their overdraft as a source of income 4

My parents warned me against overdrafts as it’s borrowed money that must be paid back eventually. Therefore, I declined the overdraft offered to me and, when my bank balance was low, I just had to wait it out until payday. 

Paying back university debt

I managed to avoid additional debt during university, but I’ve still accrued more than £45,000 that I have to pay back.

It’s a widely held belief that going to university improves your chances of securing a well-paid job after graduation and pushes you up the career ladder. And it’s true. Graduates typically enjoy higher employment rates and earn £10,000 a year more than average non-graduates 5

A 2019 study revealed 6 that the average first-time salary for graduates across the board is £29,000, which fluctuates between £24,000 and £35,000 depending on the industry. 

My story is a little different, though. 

University opened doors for me, but I chose an industry that tends to pay junior staff members less generously than other professions. 

However, three years after graduating and three jobs later, I finally started earning enough to start repaying my loan.

It would have been earlier on in my career, but once I cracked the £21,000 threshold, the government increased the repayment threshold to earnings above £25,725. It’s set to rise again in April 2020 to £26,575.  

Was it worth it?

If I hadn’t landed a job within six months of graduating or if I’d changed my mind halfway through my course, I might see my student loan as a burden. 

Luckily, I’ve been successful, and I attribute that to my university education or at least for giving me a leg up. 

However, I recognise that this isn’t always the case for graduates as a 2014 study found that only 50% work in a field relating to their degree 7.

Overall, the upfront cost was minimal because I avoided unnecessary loans, lived in student accommodation for all three years, and my parents could fund me if things got tight.   

Five tips for going to university

If you’re undecided whether you want to go, here are some ideas to keep costs low.

1. Learn how to budget 

The financial advice my parents instilled in me for years had a positive impact on how I funded my lifestyle. For example, if you divide your wages by the number of days until your next payday, you'll get an accurate estimation of how much you can spend per day. 

2. Don’t be put off by the word ‘debt’ 

Your student loan isn’t payable until you meet certain thresholds and it’s treated like a tax rather than a loan. You'll also stop paying it if you go below those thresholds due to unemployment or redundancy.

3. Cut costs where you can 

Living in student accommodation throughout university can help cut costs as it eliminates upfront deposits and stress from housemates not paying their rent on time.

4. Get a job 

I studied a vocational degree that didn’t rely so heavily on studying, so I had the time (and energy) to work alongside my studies. I only worked eight hours a week, and that gave me a healthy amount to live on, even four hours could give you around £50 a week. 

5. Don’t go if you don’t want to

Don’t let the pressure from your parents, peers or school force you into a decision that isn’t right for you. University is just one of plenty of ways to pursue your desired career, and for many people, it doesn’t make sense.