So you have graduated – you may be excited or apprehensive about your future. Sad because you will miss your uni friends or know it’s time to move on. Or harassed and hungover as you try to get things packed up to leave.
But whatever you choose to do next – a job, an intern position, go travelling, or more studying – there’s some financial admin you should deal with now, to stop big problems happening in the future.
Take a few minutes to read these through and tick off what’s relevant to you.
The repayments for student loans taken out after 1998 are “income contingent”. After you graduate, the loan is paid back in varying amounts depending on your income and the amount of interest added also depends on your income:
- if you are in employment, you pay the loan back through direct deductions from your payroll.
- if you are self-employed, you pay the loan back through the tax self-assessment system.
There are two types of Income Contingent Loan, Plan 1 and Plan 2. In 2020, most students graduating in England and Wales will be on Plan 2.
For more information on which you have, and paying back your student loans, visit this guide on the UCAS website.
The Student Loans Company keeps track of your income through your National Insurance number. You must make sure the Student Loans Company has the right contact details for you.
It is really important that they have your correct address as, if you are on Plan 2, the interest you will be charged shoots up if you don’t respond to any requests from them for information or evidence. Do not assume if you aren’t earning you don’t have to tell them anything!
The bad news is that the info you can get on what you owe once you start repaying can be politely described as rubbish. You would expect to be able to see what you owe at the Student Loan Repayment site, including your repayments and the interest being added.
But all you actually get is the information from your last annual paper statement! I suppose I can understand why they only get the information from HMRC about your payments through PAYE once a year, but you also can’t see any “one-off” payments you make or the interest which is being accrued. No commercial loan provider could get away with this.
Budgeting and benefits
Going into the working world can be a culture shock, especially if you’re used to relying on loans and student prices and discounts!
You should start budgeting, especially if you don’t have much money coming in. Look for the best apps that will help make this less hard work, see Apps that help you budget and save.
You might be able to get benefits such as Jobseekers Allowance or Universal Credit to help you while you’re looking for work. These take a few weeks to actually pay out, so don’t wait until you are out of money to sign on at your local Job Centre.
Make sure you speak to your landlord about getting the deposit back for your university home. In 2018 research found that 1 in 3 students say they’ve been ‘unfairly cheated’ out of deposits Two of the main problems are around cleaning and damage.
For many people leaving university, returning to mum and dad’s while you get on your feet is completely normal – but if you are thinking about moving out, make sure you know what the full costs of renting might be. This is about more than just the rent – you should also think about bills and upfront costs, such as agency fees.
Money Advice Service has a guide for looking at how much rent you can afford.
Student bank accounts
It’s important you check your current student account’s terms and conditions to see what difference graduating might make on any interest-free overdrafts or other perks.
Graduating is a great time to shop around for a new account rather than sticking with the same bank.
Key point – loyalty doesn’t pay. Whether it’s car insurance, mobile contracts, utility companies or bank account, the best deals go to new customers. If you don’t switch, you are paying more to subsidise those good deals for the people who do. Become a switcher – now and for the rest of your life!
As this article says: “Loyalty is a wonderful quality in a labrador or a best friend, but as a consumer you’ll be far better off if you are more flighty.”
Most people graduating have an overdraft. In this case, look for a Graduate Bank Account which offers you a long period of interest-free overdraft. If you aren’t in your overdraft, look for a standard current account that’s going to give you more interest on your balance or better perks. Money Saving Expert has a good guide on graduate bank accounts.
You must pay off any bills from your student home. Lots of students split the responsibility for bills, so Fred pays the electricity, Rav pays the phone and TV etc – but you may legally be jointly responsible for them so everyone in the house needs to know that all the bills have been paid. Unpaid bills could damage your credit rating – making getting a new phone, or tenancy agreement more difficult.
Don’t just cancel a Direct Debit and assume that has dealt with a bill. Phone the company up and ask if there is anything more to pay. Once you’ve paid off any household bills, cancel any DDs and STOs, shut the accounts and keep a record of this.
Key point: Always shut accounts in writing. Whether it’s gym memberships, cable TV or utility bills, tell the firm by letter or email that you are closing the account and then keep this evidence. If you are also moving, give them your new address, this allows any problems to be resolved.
See if you can get a refund from your TV licence fee, see Student TV licence refunds for details.
It’s important you update your contact details with anyone that may need to get hold of you about owed money – or even refunds.
Make sure you tell:
- your bank
- your phone company
- the DVLA if you have a driving licence
- any insurance companies – such as for home insurance, or car insurance.
Key point: Always notify change of address in writing. If you are using a form on a website, take a screenshot of it in case they don’t email you a confirmation. If you do this over the phone it can be much harder to prove later on.
It’s also very important you’re registered on the electoral register with your correct address details. Not only will being on the electoral register mean you’re entitled to vote, but it can also help with your credit rating – win-win!
If you are going travelling, or just sofa surfing with friends for a while until you get a job and can afford a tenancy, you may want to leave your address at your parents’ house.
If you do this, you need to know when important mail has arrived – either they have to forward everything, or you have to pick it up once a week, or they have to open it and tell you what has come.
How important is this?
When you have just left uni and haven’t yet got a long-term job or a permanent place to live, all this can feel unimportant and that you will sort it out later. But your credit rating could be wrecked for six years by a CCJ you were unaware of, as the court forms went to your old address.
In three or fours years time you may have a good job and be hoping to buy a house – you don’t want black marks all over your credit record because of stuff that happened when you left uni.
Being organised and methodical about these things makes your life easier:
- get a file for financial paperwork if you don’t have one already;
- open those letters and deal with them – bin the advertising, file the statements, and tackle any problems because they don’t get easier if you ignore them.
Then you will graduate not just with a degree but with some key financial lessons well learned!